Record number of pension-risk transfer contracts sold in Q3: Limra

The number of pension-risk transfer contracts sold in a quarter of a year reached an all-time high record in the third quarter, Limra announced.

The firm’s U.S. Group Annuity Risk Transfer Sales Survey noted, however, that total PRT premium was down 60%, from $10.6 billion in third quarter 2022.

A group annuity risk transfer product, such as a pension buy-out product, enables an employer to transfer all or a portion of its pension liability to an insurer. Organizations can use these transactions to remove the liability from its balance sheet and reduce the volatility of its pension’s funded status.

Additionally, Limra said single premium buy-out sales hit $8.1 billion, falling 69% lower from last year’s third quarter. Year-to-date buy-out sales fell 30% to $28.9 billion, when compared to last year’s quarter. As for buy-out contracts, 203 were completed in the third quarter this year, up 40% from the third quarter 2022.

Meanwhile, four single premium buy-in contracts totaled $2.3 billion in 2023. Year to date, the eight buy-in contracts totaled $3.9 billion, 47% higher than the same period in 2022. 483 buy-out contracts were completed year to date, more than double sold in the first three quarters of 2022.

Premium assets also increased in the third quarter this year. 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.

Keith Golembiewski, senior director of strategic initiatives at Limra, said that despite the decline in premium, the record number of contracts sold signals a great deal of interest for those with small and midsize plans.

“The economic environment continues to deliver strong funding statuses, which is encouraging more plan sponsors to think about de-risking their pension liability,” he said in a release.

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.