Pension Plan Annuity Purchase Update

Pension Plan Annuity Purchase Update – Q1 2019

Jun 4, 2019 | Annuity Purchase, Categories, Industry Updates

Market Activity


Source: LIMRA Secure Retirement Institute

Following the record-breaking $26.3 billion in 2018, total pension buyout sales eclipsed $4.7 billion in Q1 2019, an increase of 240% compared to Q1 2018. Sales were driven by many small and mid-sized deals, as well as one large placement of $1.8 billion by Lockheed Martin. Two thirds of PRT providers saw increased sales compared to Q1 last year.

What we’re seeing

Despite the increased number of buyouts in what is typically the quietest quarter, pricing remains competitive for both retiree carveouts and plan terminations. For retiree only cases, pricing continues to average about 99% of the accounting liability[1], while plan termination cases average about 101%. Regardless of premium size, plan sponsors can expect competitive bidding.

What we’re hearing

Retiree liftouts continue to dominate the large-case market. However, on the small end, most transactions are plan terminations. This continues a trend from 2018, where about 55% of transactions were plan terminations, but these cases only accounted for about 22% of total premium. Insurers expect the pipeline to remain heavy throughout the year.

 

[1] Measured using FTSE curve and best estimate of underlying mortality.

 

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