Over 500 U.S. corporations with pension plans transferred liabilities to insurance companies during the first nine months of 2024, a new record, according to a survey.
U.S. pension risk transfer volume for the third quarter was significantly higher from the year-over-year period, a LIMRA survey found.
Total dollar volume for pension buyout and buy-in transactions for the quarter ended Sept. 30 was $14.2 billion, up from $10.4 billion during the third quarter of 2023. There were 203 single-premium buyout transactions totaling $13.1 billion during the third quarter of 2024.
Year to date, there have been 530 buyout contracts sold, a new record for the nine months ended Sept. 30, according to LIMRA.
“While new premium growth rebounded in the third quarter, the growth can be attributed to larger deal activity,” said Keith Golembiewski, assistant vice president and head of LIMRA Annuity Research, a news release Dec. 10.
“The bigger story continues to be the expansion of the PRT market. Carriers reported the largest number of contracts ever sold in the first nine months of the year. Higher interest rates are driving companies to de-risk their pension liabilities to annuity providers. LIMRA expects this trend to continue through the rest of the year.”
Also during the third quarter, there were three buy-in contracts totaling just over $1 billion. Pension buy-in transactions, in which an insurer reimburses the company for benefit payments the plan will make to its retirees and beneficiaries, are very common in the U.K., but rare in the U.S.
By far the largest buyout transaction completed during the third quarter, representing nearly half the total dollars volume, was Armonk, N.Y.-based International Business Machines’ Sept. 11 purchase of a group annuity contract from Prudential Insurance Co. of America to transfer $6 billion in defined benefit plan liabilities.
The purchase of the contract will transfer the benefit-paying responsibility for about 32,000 retirees and beneficiaries covered by the IBM Personal Pension Plan to Prudential, effective Jan. 1.
LIMRA surveyed the 21 financial services companies that provide all the group annuity contracts for U.S. corporate pension plans.
