Big dollar deals push PRT market to expected new record — report

The U.S. pension risk transfer market experienced an estimated $27 billion in volume in the third quarter, which should lead to a new annual record exceeding $50 billion, according to a report from Legal & General Group.

It was the second-largest quarter on record, behind only the fourth quarter of 2012 when General Motors Co., Detroit, transferred $29 billion to Prudential Insurance Co. of America via a pension buyout transaction, according to the insurer's latest Pension Risk Transfer monitor. That quarter notched $36 billion in volume.

During the third quarter, International Business Machines, Armonk, N.Y., purchased group annuity contracts from Prudential and Metropolitan Life Insurance Co. to transfer a total of $16 billion in U.S. pension plan liabilities. The purchases, which closed Sept. 13, transferred the benefit-paying responsibility for about 100,000 retirees and beneficiaries covered by the IBM Personal Pension Plan.

The transactions led Legal & General to estimate a total of $55 billion in volume for 2022, shattering the all-time record of $38.1 billion it recorded in 2021. The report noted that 2022 would still be a record year even without the massive IBM buyout.

"It's clear the U.S. PRT market isn't slowing down anytime soon,'' said Sheena McEwen, vice president, head of distribution at LGRA, in a news release Thursday announcing the report.

"We've seen a steady increase in transactions year-over-year, with this year expected to close nearly $17 billion higher than last," she said. "The record growth further emphasizes that PRT is a key derisking strategy for plan sponsors even amidst market uncertainty."

Other deals announced in the third quarter include Pittsburgh-based Alcoa Corp.'s August purchase of group annuity contracts from two Athene Holding subsidiaries to transfer about $1 billion in U.S. pension plan liabilities.