U.S. pension risk transfer volume reached an estimated $4 billion during the third quarter, according to a new report from Legal & General Retirement America.
It was an increase over the $2.3 billion in PRT volume in the second quarter, but less than the $7.7 billion in volume in the third quarter of 2019, according to the report.
Of the total, about 60% of transactions were retiree liftouts, a type of buyout, while the rest were the results of plan terminations during the third quarter. A buyout can be implemented either through the termination of the plan and transfer of all retirees, or the plan is not terminated and just a portion of retirees' benefits are transferred.
"A strong Q3 for the PRT market demonstrates the continued appetite for companies across the U.S. to derisk," said George L. Palms Jr., president of LGRA, in a news release Thursday announcing the report. "The rise in liftouts this quarter signals that plan sponsors are gaining confidence in the economic outlook, and we look forward to seeing how this trend evolves through the end of the year."
LGRA expects momentum in pension risk transfer transactions to continue, estimating a total of $25 billion in volume for 2020.