LIMRA: 2022 single premium buy-out sales topple prior record

By Staff Reports

Total U.S. single premium buy-out sales were $48.3 billion in 2022, up 42% from 2021 results, according to LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey. This marks the highest annual sales for single premium buy-out sales recorded in the U.S.

The number of single premium buy-out contracts also hit a record. In total, there were 562 buy-out contracts, 34% higher than the number of contracts sold in 2021. This breaks the previous record set in 2019 of 500 contracts sold.

“Rising interest rates and equity market volatility created an attractive environment for single premium buy-out sales in 2022,” said Mark Paracer, assistant research director, LIMRA annuity research. “While there were a couple of jumbo deals ($1 billion+), the record high number of contracts suggests broad interest from plan sponsors of all sizes. The higher interest rates improved plans’ funding status, enabling more employers to mitigate their risk through a pension risk transfer (PRT) solution."

Fourth quarter 2022 single premium buy-out sales slowed following the record-level results in the third quarter. Single premium buy-out sales totaled $7.2 billion, down 42% from prior year. There were 200 contracts sold in the fourth quarter, up 16% from fourth quarter 2021, and an increase of 32% from third quarter 2022.

In the fourth quarter, there were three single premium buy-in contracts representing $894.4 million. This is more than double (123%) the fourth quarter 2021 sales results. For the year, single premium buy-in sales fell nearly 9% to $3.6 billion. There were seven single premium contract sales sold in 2022.

In 2022, buy-out and buy-in sales collectively were $51.9 billion, which was 36% higher than in 2021, and set a new record for cumulative sales.

At the end of 2022, total group annuity assets totaled $274 billion, increasing 14% from 2021. The $234 billion in single premium buy-out assets represent 86% of the total PRT market assets. Single premium buy-in assets were $6.7 billion at year-end, making up 2% of the market.

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.

This survey includes 20 carriers who represent 100% of the U.S. PRT market. Breakouts of pension buy-out sales by quarter and pension buy-in sales by quarter since 2016 are available in the LIMRA Fact Tank.