US pension risk transfer activity was healthy in 2023, with 30 public companies disclosing that they offloaded pension obligations to an insurance company during the year.
The disclosed transactions totaled $16.80 billion in pension obligations transferred, which impacted about 150,000 plan participants or their beneficiaries, according to a review of publicly available documents by S&P Global Market Intelligence. The previous year's analysis yielded 23 disclosed deals totaling $27.99 billion in obligations transferred for approximately 190,000 pensioners.
LIMRA has yet to release its full-year 2023 pension buyout sales report. However, through the first nine months of the year, the industry research group reported sales of $29.04 billion compared to $41.12 billion during the same period of 2022. Prudential Financial Inc. estimates the full-year 2023 transfer volume at about $45 billion.
Athene involved in largest deal in 2023
The largest pension risk transfer (PRT) deal in 2023 was AT&T Inc.'s purchase of a nonparticipating single group annuity from Athene Holding Ltd. Under the terms of the deal, the annuity will cover about 96,000 participants and transfer approximately $8.05 billion in pension benefits.
ATI Inc. disclosed that it transferred almost 85% of its US pension plan obligations to Athene in October 2023, which would equal an estimated value of $1.50 billion, using its stated $1.77 billion in plan liabilities as of Dec. 31, 2022. The deal sends 8,200 participants to the insurer.
Athene reported its pension group annuity inflows fell to $10.37 billion in 2023, compared to $11.22 billion during the previous year and $13.84 billion in 2021.
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Another billion-dollar transaction was announced between Prudential and Public Service Electric and Gas Co. The group annuity was purchased in July and covers 2,000 participants.
The New Jersey-based insurer disclosed during its fourth-quarter 2023 earnings call that it closed 11 transactions worth almost $6 billion in 2023. The insurer is also off to a fast start in 2024, as it completed two jumbo deals in February. The first was a $4.92 billion deal with Shell PLC, and the other was a $5.90 billion transaction that Verizon Communications Inc. announced would be split 50/50 between Prudential and Reinsurance Group of America Inc.
RGA was also involved in a deal with Legal & General Group PLC's US-based unit in 2023, when PPG Industries Inc. transferred $309 million in obligations for 4,000 of retirees to the insurers.
F&G Annuities & Life Inc., Principal Financial Group Inc., Massachusetts Mutual Life Insurance Co. and Brookfield Reinsurance Ltd.'s American National Insurance Co. and American National Life Insurance Co. of New York were the other insurers with publicly disclosed PRT transactions during 2023.
Other PRT activities
There were approximately $4.90 billion worth of pension risk transfers that took place in 2023 where the insurer was not disclosed, with two of the deals transferring at least $1 billion in obligations.
The largest of the deals involved Dow Inc. when it sent $1.68 billion of its US and Canadian pension obligations and $1.62 million in plan assets to an unnamed insurance company during the fourth quarter of 2023.
In June 2023, Charter Communications Inc. purchased a buy-in group annuity contract valued at $1.4 billion at the time of purchase. The company plans to fully terminate its qualified pension plan, which had obligations of $2.4 billion as of Dec. 31, 2023.
Several companies only disclosed that they transferred pension obligations to an insurance company during 2023 with no additional details provided: Shenandoah Telecommunications Co., The Goodyear Tire & Rubber Co., Southwestern Energy Co., Resideo Technologies Inc. and Macy's Inc.