LIMRA: Record-high 1Q sales for U.S. pension risk market

"The record pension risk transfer sales in the first quarter are a result of continued strong buyout sales combined with a growing buy-in market," said Mark Paracer, assistant research director, LIMRA annuity research. "While the economic impact of the COVID-19 pandemic slowed the volume of pension risk transfer in the first half of 2021, we expect increasing Pension Benefit Guaranty Corporation premiums and administration costs will continue to drive companies toward pension risk transfer deals and drive strong growth in this market throughout 2022."

In the first quarter, there was $2.7 billion in buy-out sales, up 163% from prior year. The 75 buy-out contracts sold, represents a 74% increase over the contracts sold in first quarter 2021. The buy-out contracts sold in the first quarter covered 46,835 participants.

There were four buy-in contracts sold in the first quarter for $2.7 billion. In comparison, first quarter 2021 recorded one contract for $2.8 billion. However, interest in buy-in solutions is growing. Over the past 5 quarters, 11 buy-in contracts for $6.5 billion have been sold.

Single premium buy-out assets reached $191 billion in the first quarter, up 15% from prior year. Single premium buy-in assets were $6.5 billion, 5% higher than prior year. Combined, single premium assets were $197.5 billion in the first quarter, an increase of 14% from first quarter 2021 results.

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 represents 100% of the U.S. Pension Risk Transfer 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.

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