US companies transferred a record amount of pension obligations to insurance companies in 2022.

The pension risk transfer market totaled $48.3 billion in single premium buyout deals in 2022, shattering the previous annual record of $36 billion set a decade ago, according to LIMRA's Group Annuity Risk Transfer Sales Survey.

On a year-over-year basis, single premium buyout sales were up by roughly $14 billion from $34.15 billion in 2021, according to the industry research group.

A massive deal

Although pension risk transfer activity overall was elevated in 2022, an enormous $16 billion landmark deal became the driver to help make the year a record-breaker.

In September 2022, subsidiaries of Prudential Financial Inc. and MetLife, Inc. issued nonparticipating single-premium group annuity contracts in a combined amount of $16 billion of pension obligations related to a massive International Business Machines Corp. pension risk-transfer buyout transaction. The contracts covered roughly 100,000 plan participants or beneficiaries.

This was the second-largest US pension risk transfer transaction on record, behind only Prudential's massive $25.1 billion deal with General Motors Co. in 2012.

A review of public documents by S&P Global Market Intelligence shows that Prudential took part in at least six transactions in 2022, totaling roughly $9.50 billion, the most for any insurer that was publicly disclosed.

Athene Holding Ltd. became involved with the second-largest pension risk transfer disclosed in 2022 when Lockheed Martin Corp. transferred approximately $4.3 billion of its gross pension obligations and related plan assets for roughly 13,600 US retirees and beneficiaries.

Athene had previously done a similarly sized deal with Lockheed Martin in late 2021.

The appetite for pension risk transfer deals among private equity firms has grown in recent years and some of those recent transactions have drawn congressional scrutiny.

In a July 2022 interview, Richard McEvoy, senior vice president and pension group annuity leader at Athene, told S&P Global Market Intelligence that the scrutiny on pension risk transfers stems from "misconception."

Unnamed insurance PRT

There were approximately $2.5 billion worth of pension risk transfers that took place in 2022 where the insurer was not disclosed.

Newmont Corp. was involved in one of the largest of these pension risk transfers. In March 2022 the company transferred a portion of the pension plan obligations from one its defined benefit pension plans to an unnamed insurance company. Approximately $527 million in pension obligations were transferred.

Gannett Co. Inc. was also part of a similarly sized pension risk transfer. In 2022 a subsidiary of the company transferred roughly $450 million of its pension liabilities and related pension assets to an insurer.