Apollo-backed Athene wins $4.9 billion Lockheed pension deal

Athene Holding Ltd. agreed to take on $4.9 billion of pension obligations from defense contractor Lockheed Martin Corp., the largest such deal ever for the insurer.

Athene will provide benefits to about 18,000 participants in Lockheed’s pension plan, according to a statement from the Apollo-backed insurer. The deal follows a 2018 agreement between the two companies in which Athene assumed $800 million in obligations tied to around 9,000 retirees and beneficiaries of the aerospace giant’s pension plan.

“The opportunity for Athene is tremendous,” Sean Brennan, Athene’s executive vice president for pension risk transfer and reinsurance, said in an interview. “Several years from now we’ll look back on 2021 and say it was really just the start of a trend of much bigger volumes that we’ve been seeing.”

Lockheed said that it would record a noncash charge of $1.7 billion tied to the deal in the third quarter. The defense contractor also lowered its earnings per share guidance for 2021, bringing that down $4.75, as a result of the pension transfer.

Insurers have been seeking out pension-transfer agreements in recent years as a way to accrue assets for investment. The popularity of the deals is also driven by employers that are looking to offload the long-term obligations.

Industry data group Limra estimates that pension-risk transfer sales could end up in the $25 billion to $30 billion range this year, according to a June statement.

Athene, which Apollo helped create in 2009, ranked as the fourth-largest seller of fixed annuities last year, according to data from industry group Limra’s Secure Retirement Institute. The private equity firm and Athene agreed in March to merge in an all-stock deal.

[More: New tax law could increase pension risk transfers]