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Pension Funds

LIMRA: U.S. corporate pension buyouts hit $10.5 billion in Q4, $26 billion for 2018

U.S. corporate pension plan buyout sales totaled about $10.5 billion during the fourth quarter and $26 billion for all of 2018, a LIMRA Secure Retirement Institute sales survey found.

The fourth-quarter total falls short of the $11.1 billion for the fourth quarter of 2017, but it is the third time since LIMRA began recording buyout sales that the fourth-quarter total exceeded $10 billion. The calendar-year total, meanwhile, exceeded the $23 billion in total buyouts for 2017.

"Sales tend to be larger in the end of the year. We've seen buyout sales over $5 billion in the fourth quarter going back to 2014," said Eugene Noble, research analyst at the institute, in a news release. "This also marks our 15th consecutive quarter with over $1 billion in sales."

Mr. Noble said one big reason the total for the year was larger was the number of mid- to large-size pension risk transfer deals. Also, the market saw the entry of two more companies — CMFG Life Insurance Co. and Great American Insurance Group — bringing the total to 17 insurance companies in the PRT market.

The largest transaction of 2018 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 in the second quarter. It was the largest such transaction in the U.S. since Verizon Communications Inc., New York, purchased a group annuity contract from Prudential Insurance Co. of America in 2012 to transfer $7.5 billion in U.S. pension plan obligations.

For the fourth quarter, the most notable transaction was Bethesda, Md.-based Lockheed Martin Co.'s purchase of a group annuity contract from Prudential to transfer about $1.8 billion in U.S. pension plan liabilities. The defense and aerospace company also completed the largest recorded U.S. pension buy-in, purchasing a contract worth $800 million, in which the plan will continue to pay benefits to be reimbursed by Athene Annuity and Life Insurance Co. The latter transaction is not reflected in LIMRA's statistics.

The LIMRA Secure Retirement Institute surveys the 17 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.