Single Premium Pension Buy-Out Sales Pass $6.2B In 3Q

WINDSOR, Conn., Dec. 11, 2018 – U.S. single premium pension buy-out product sales topped $6.2 billion in the third quarter 2018. This is the second time third quarter buy-out sales have surpassed $6 billion, and is the second highest third quarter sales total on record for the past 15 years, according to the LIMRA Secure Retirement Institute (LIMRA SRI) quarterly U.S. Group Annuity Risk Transfer Survey.

Year-to-date, buy-out sales were $15.9 billion. Total assets of buy-out products were more than $126 billion in the third quarter, 21 percent higher than the prior year. Survey participants reported 167 new contracts in the third quarter of 2018.

“Year-to-date, pension buy-out sales are up 33 percent compared to last year. While this was driven primarily from large pension risk buy-out contracts that were reported in the second quarter, third quarter showed a return to small and medium sized sales,” noted Eugene Noble, research analyst, LIMRA SRI. “Since market growth cannot be reliant on only big deals, the return to small and medium-sized deals this quarter show continued market acceptance and great promise. We expect sales to exceed $23 billion for this year,” said Noble.

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.

Sixteen companies participated in this survey. A breakout of pension buy-out sales by quarter since 2012 is available in the LIMRA Data Bank