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LIMRA: Record High Number of Pension Risk Transfer Contracts Sold in Third Quarter 2023
12/19/2023
WINDSOR, Conn., Dec. 19, 2023 — There were total U.S. pension risk transfer (PRT) contracts sold in the third quarter, a 39% increase , according to LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey. This marks the highest number of PRT contracts ever recorded in a quarter.
Total PRT premium was $10.6 billion, down 60% from the record set in third quarter 2022.
“After record-breaking new premium collected a year ago, third quarter 2023 sales fell back to a more moderate level. Despite the decline in premium, the record number of contracts signals broader interest with mid-sized and small plans,” said Keith Golembiewski, Senior Director, Strategic Initiatives, LIMRA. “The economic environment continues to deliver strong funding statuses, which is encouraging more plan sponsors to think about derisking their pension liability.”
Single-premium buy-out sales were $8.1 billion in the third quarter, 69% lower than the prior year’s results. Year-to-date (YTD), buy-out sales fell 30% to $28.9 billion, compared with prior year. There were 203 buy-out contracts in the third quarter, up 40% from the third quarter 2022. YTD, there were 483 buy-out contracts completed, more than double (123%) the number of contracts sold in the first three quarters of 2022.
In the third quarter 2023, there were four single-premium buy-in contracts sold totaling $2.3 billion, level with new premium in third quarter 2022. YTD, the eight buy-in contracts totaled $3.9 billion, 47% higher than the same period in 2022.
Single premium buy-out assets reached $256.3 billion in the third quarter, up 11% from the prior year. Single premium buy-in assets were $8.1 billion, 24% higher than third quarter 2022. Combined, single premium assets were $259.8 billion in the third quarter, a 10% increase from the second quarter 2022 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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