LIMRA News Releases
2014 Pension Buy-out Sales More than Double Previous Year
WINDSOR, Conn., March 5, 2015—Group pension buy-out sales reached $8. 5
billion in 2014, a 120 percent increase over the 2013 total of $3.8 billion,
according to new survey results from LIMRA Secure Retirement Institute.
“After many years of staying in the $1 to $2 billion range, sales in the
pension risk transfer buy-out market have eclipsed $3.5 billion for three
consecutive years,” said Michael Ericson, analyst for LIMRA Secure Retirement
Institute.
Last year the number of buy-out contracts increased to 277, compared to 217
in 2013. Ericson said the actual number of contracts doesn’t tell the whole
story because a few large contracts can significantly affect sales in the
market. As a result of two large buy-out deals in the fourth quarter,
total assets topped $128 billion in 2014, the highest ever reported.
In fourth quarter 2014 Bristol-Meyers Squibb and Motorola each transferred
their group pension obligations to Prudential. The sales from these two “jumbo”
deals represented more than half of the $8.5 billion total for the year.
Total buy-out sales in 2014 were the third highest since LIMRA began tracking
this statistic in 1986. Sales in 2012 hit a record when General Motors and
Verizon offloaded their group pension obligations to Prudential, causing sales
to spike to $35.9 billion for the year. Sales in 2012 are seen as an anomaly
because those two deals represented nearly all the sales that year.
“The growth in this market is also attracting new players,” Ericson said.
“Two new companies entered the market in 2014 bringing the total to 11
companies.”
While a DB pension plan adds equity to a company, years of low interest rates
and increasing Pension Benefit Guarantee Corporation premiums have encouraged
more companies to consider transferring their risk to an insurer by purchasing a
group annuity.
LIMRA Secure Retirement Institute administers the Group Annuity Risk Transfer
Survey every quarter.
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LIMRA Media Contacts
Catherine Theroux, 860-285-7787, ctheroux@limra.com
Mark Morris,
860-285-7875, mmorris@limra.com
About LIMRA
LIMRA, a worldwide research, learning and development organization, is the
trusted source of industry knowledge, helping more than 850 insurance and
financial services companies in 64 countries increase their marketing and
distribution effectiveness. Visit LIMRA at www.limra.com.
About LIMRA Secure Retirement Institute
The LIMRA LOMA Secure Retirement Institute provides comprehensive, unbiased
research and education about all aspects within the retirement industry to
improve retirement readiness and promote retirement security. For
information on the LIMRA LOMA Secure Retirement Institute, visit: www.secureretirementinstitute.com.