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Pension Funds

LIMRA: Pension buyouts exceed $11 billion in quarter as deals reach $23 billion in 2017

U.S. corporate pension plan buyouts reached $11.1 billion in the fourth quarter of 2017, a LIMRA Secure Retirement Institute sales survey found.

It is the first time since the fourth quarter of 2012 that pension buyout sales exceeded $10 billion, when the blockbuster deals involving General Motors Co., Detroit, and Verizon Communications Inc., New York, brought that quarter's total to $34.6 billion.

This quarter's total was almost double the same quarter in 2016, when pension buyout sales totaled $5.7 billion.

The total for U.S. pension buyout sales in 2017 was $23 billion, up from $13.7 billion in 2016. The first-, second- and third-quarter sales in 2017 were $1.4 billion, $4.1 billion and $6.4 billion, respectively.

"We strongly suspect that the (pension risk transfer) market will continue to grow in 2018 and beyond, well into 2020," said Eugene Noble, research analyst for the institute, in a telephone interview. "The meat of the story this year was this was such a fantastic year for the PRT market despite not having a single jumbo deal."

Mr. Noble said the strong sales numbers in 2017 is evidence that jumbo deals are not necessary for a large volume of dollars in pension risk transfer deals.

"Companies are becoming more and more active in the PRT marketplace," Mr. Noble said.

Among the notable transactions in the fourth quarter was International Paper Co., Memphis, Tenn., purchasing a group annuity contract from Prudential Insurance Co. of America to transfer about $1.3 billion in U.S. pension plan liabilities. That transaction closed on Oct. 3.

The LIMRA Secure Retirement Institute surveys the 15 financial services companies that provide all the group annuity contracts for the U.S. for its Group Annuity Risk Transfer Survey every quarter.