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Pension Risk Transfer Volume Looks Great: Life Insurers

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Athene Holding Ltd. and Legal & General Retirement America say the world’s pension risk transfer market continues to look great.

Pension risk transfer arrangements give pension plan sponsors a way to shed part or all of their responsibility for pension benefits obligations. The sponsors transfer the risk to life insurers by using one big premium to buy a large group annuity.

(Related: Resolution Life Agrees to Pay $902 Million for Voya’s Individual Life Business)

Group annuity issuers can use the pension risk transfer to shed some or all of the risk they have assumed.

Athene — a company based in Pembroke, Bermuda, that does much of its business in the United States — says it handled about $6 billion in pension risk transfer deals in 2019. That total includes an $800 million reinsurance deal with an insurer in the United Kingdom.

Athene says that, since 2017, it has closed 16 pension risk transfer deals involving about $11 billion in deal value, and pension payment streams for about 168,000 people.

Legal & General Retirement America announced in December that it had completed about $1.1 billion in pension risk transfer deals in the United States in 2019.

Legal & General Retirement America is a Stamford, Connecticut-based arm of Legal & General Group PLC. Legal & General as a whole completed about $14 billion in deals in 2019.

Over the course of 30 years, Legal & General has completed about 3,500 pension risk transfer deals, involving about $80 billion in annuity portfolio value and about 1 million annuitants, according to company figures.

Bill Wheeler, president of Athene, said in a comment on his company’s deals that the targeted returns for the 2019 pension risk transfer deals have been attractive.

George Palms, president of Legal & General Retirement America, said in written responses to questions that his company saw an increase in activity in the fourth quarter, which is common in the pension risk transfer market, and that the pipeline for 2020 activity looks good.

“Typically, clients try to avoid placing plan terminations in Q4 as insurer capacity is limited, with heavy deal flow,” Palms said. “However, we are already seeing an unusual level of planning activity for plan terminations in 2020.”

— Read Athene Completes $19 Billion Voya Annuity Reinsurance Dealon ThinkAdvisor.

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