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Pension Risk Transfer

LIMRA: U.S. corporate pension buyouts total $6.3 billion in Q3

FedEx Corp.’s transfer of about $6 billion in U.S. pension plan obligations through a group annuity contract was the biggest deal of the quarter.

U.S. corporate pension plan buyout sales totaled $6.3 billion during the third quarter, a LIMRA Secure Retirement Institute sales survey found.

It is the second-highest third-quarter total recorded by the research institute in the past 15 years and the 14th consecutive quarter sales have surpassed $1 billion. The total falls just below the $6.4 billion in sales recorded in the third quarter of 2017.

Year-to-date Sept. 30, pension plan buyout sales totaled $15.9 billion compared to $11.9 billion during the same period in 2017. The institute also projects total sales for 2018 will exceed $23 billion. Buyout sales in 2017 totaled $22.99 billion, according to the survey.

"Year-to-date, pension buyout sales are up 33% compared to last year," said Eugene Noble, research analyst at the institute, in a news release. "While this was driven primarily from large pension risk buyout contracts that were reported in the second quarter, the third quarter showed a return to small- and medium-sized sales. Since market growth cannot be reliant on only big deals, the return to small- and medium-sized deals this quarter shows continued market acceptance and great promise."

The largest of the transactions in the second quarter was Memphis, Tenn.-based FedEx Corp.'s purchase of a group annuity contract from Metropolitan Life Insurance Co. to transfer about $6 billion in U.S. pension plan obligations.

Third-quarter transactions also included TJX Cos., Framingham, Mass., and Devon Energy Corp., Oklahoma City, purchasing group annuity contracts to transfer $207 million and $190 million, respectively, in U.S. pension plan liabilities to undisclosed insurance companies.

The LIMRA Secure Retirement Institute surveys the 16 financial services companies that provide all the group annuity contracts for the U.S. for its U.S. Group Annuity Risk Transfer Survey every quarter.