AK Steel forges annuity contract for $615 million in pension liabilities

AK Steel Holding Corp., West Chester, Ohio, purchased a group annuity contract from Massachusetts Mutual Life Insurance Co. to transfer about $615 million in pension liabilities.

MassMutual will begin making benefit payments to about 4,250 retirees from AK Steel's pension plan on March 1, 2020, according to an 8-K filing Wednesday with the SEC.

It is the steel company's second pension buyout transaction with MassMutual in as many years.

In October 2018, AK Steel transferred to the insurance company about $280 million in pension liabilities, representing the benefits of about 5,400 retirees and beneficiaries.

Before that, AK Steel purchased two group annuity contracts in 2016 from a single unnamed insurance company to transfer a total of $210 million in pension liabilities.

"We are pleased to have completed another annuity transaction, which brings the total pension obligations we have transferred to highly rated annuity providers to about $1.1 billion over the past three years," said CEO Roger K. Newport said in an email. "This is another important step in derisking our balance sheet, while continuing to demonstrate our commitment to ensuring our retirees' benefits are secure."

As of Dec. 31, AK Steel's pension plan assets totaled $1.74 billion, while projected benefit obligations totaled $2.21 billion, for a funding ratio of 78.7%, according to the company's most recent 10-K filing.

Spokeswoman Lisa H. Jester could not be immediately reached to provide further information.