Lockheed Martin Corp., Bethesda, Md., purchased a group annuity contract from Metropolitan Tower Life Insurance Co. to transfer $1.9 billion in pension liabilities.
The December annuity contract purchase transfers the responsibility of paying the benefits of about 20,000 U.S. retirees and beneficiaries to the insurance company, according to an 8-K filing Tuesday with the SEC. A MetLife news release Tuesday identified its subsidiary Metropolitan Tower Life Insurance Co. as the insurance company.
“This agreement will allow Lockheed Martin to focus on its core mission and mitigate financial risk associated with market volatility, while leveraging MetLife’s expertise managing transferred pension liabilities to ensure a seamless transition for retirees and beneficiaries included in the transaction,” said Ken Possenriede, executive vice president and chief financial officer of Lockheed Martin, in the news release.
The pension buyout was the third major pension risk transfer transaction for the defense and aerospace company since the beginning of 2019.
In January 2019, Lockheed Martin purchased two group annuity contracts from Prudential Insurance Co. of America and Athene Annuity and Life Co. totaling $2.6 billion.
The Prudential contract was a $1.8 billion buyout that affected about 32,000 U.S. retirees and beneficiaries in the defense and aerospace company's defined benefit plans. The Athene contract was an $800 million buy-in affecting about 9,000 U.S. retirees and beneficiaries, in which the plan continues to pay benefits to be reimbursed by Athene.
Lockheed Martin did not disclose the name of insurance company from which it purchased the new contract.
John Mollard, vice president and treasurer at Lockheed Martin, said in a February 2019 telephone interview that the company was looking to complete multiple "marketable transactions" to avoid the issue of having only one or two insurance companies with the capacity to complete them.
"We want marketable blocks that we could take as a series of transactions over a 10-year horizon," Mr. Mollard said at the time.
As of Sept. 30, Lockheed Martin had $36.7 billion in U.S. defined benefit plan assets, according to Pensions & Investments data.
Lockheed Martin spokeswoman Laura Toole could not be immediately reached to provide further information.