3Q U.S. Single-Premium Pension Buy-Out Sales Double 2Q Results

The U.S. single premium buy-out sales totaled $4.6 billion in the third quarter, down 41% from third quarter 2019 but double the $2.3 billion sold in the second quarter, according to the Secure Retirement Institute U.S. Group Annuity Risk Transfer Sales Survey.

“Third quarter pension risk transfer buyout sales rebounded significantly from the second quarter sales results. If you exclude the $2.6 billion jumbo deal in third quarter 2019, third quarter 2020 buy-out sales were only 10% below prior year,” said Mark Paracer, assistant research director, SRI. “We are hearing from the carriers that the volume is picking up. The fourth quarter is typically a busy time as plan sponsors look to close out deals by the year-end. We expect this trend to continue in 2020.”

Year-to-date buy-out sales totaled $11.3 billion, a drop of 32%, compared with the $16.7 billion sold in the first nine months of 2019.

There were 106 new contracts covering 66,740 participants recorded in the third quarter, a 5% decline in contracts from third quarter 2019. Year-to-date, there were 255 contracts sold, 15% lower than the same period in 2019.

In the third quarter 2020, there was one buy-in contract reported for $209 million. This was the first buy-in transaction of 2020. There were six buy-in contracts sold in 2019.

The overall group annuity risk transfer sales were $4.9 billion for the quarter, 38% below third quarter 2019. In the first nine months of 2020, total group annuity risk transfer sales were $11.9 billion, down 34% from prior year results.

Total single premium buy-out assets were $157.4 billion and total buy-in assets were $2.1 billion. Together the $159.5 billion in single premium assets increased 10% percent over last year.

A group annuity risk transfer product, such as a pension buy-out product, allows an employer to transfer all or a portion of its pension liability to an insurer. In doing so, an employer can remove the liability from its balance sheet and reduce the volatility of the funded status.

Seventeen companies participated in this survey, representing 100% of the U.S. pension risk transfer market.