ADM to transfer $700 million in U.S. pension liabilities

Archer Daniels Midland Co., Chicago, purchased group annuity contracts from three insurance companies to transfer a total of about $700 million in U.S. pension plan liabilities.

The food processing company on April 1 purchased group annuity contracts from American General Life Insurance Co., its affiliate The United States Life Insurance Co. in the City of New York, and Principal Life Insurance Co., it disclosed in a 10-Q filing with the SEC on Wednesday.

The purchase transfers the benefit-paying responsibility to the insurers of about 6,000 retirees and former employees who have yet to retire who are vested in the ADM Retirement Plan and the ADM Pension Plan for Hourly-Wage Employees.

How those responsibilities will be split among the three insurers was not disclosed. The insurers will take on the responsibility of paying benefits on July 1, ADM spokeswoman Jackie Anderson said in an email. She referred further questions to the 10-Q filing.

The transactions represent ADM's second significant pension risk transfer in the past three years. In November 2018, the company purchased a group annuity contract from Prudential Insurance Co. of America to transfer about $500 million in U.S. pension plan liabilities. That transaction transferred the benefit payments and administration of about 3,800 retirees and beneficiaries in the ADM Retirement Plan who began receiving benefits on Jan. 1, 2018.

As of Dec. 31, global pension plan assets totaled $2.337 billion, while projected benefit obligations totaled $3.014 billion, for a funding ratio of 77.5%.

The ADM Retirement Plan and the ADM Pension Plan for Hourly-Wage Employees had $965 million and $506 million in assets, respectively, as of Dec 31, 2019, according to those plans' most recent Form 5500 filings.