Author: Greg Winterton

Legal & General has completed a pension risk transfer buy-out with the Nortel Networks UK Pension Plan.  This deal is the third transaction between the two parties and insures the final tranche of Nortel’s plan members’ benefits. It consisted of a £14m initial premium and was followed by a £6m top-up on buy-out. Legal & General has now insured £2.5bn of the plan’s liabilities. The plan’s sponsor went into administration in 2009 and entered a Pension Protection Fund (PPF) assessment. While in assessment the plan was able to secure material additional funds from the Nortel insolvency process to improve member benefits. The…

Higher interest rates around the world are transforming the outlook for life insurance growth and profitability, according to the Swiss Re Institute. In its new sigma study, ‘Life insurance in the higher interest rate era: asset-savvy is the new asset-light’, Swiss Re Institute forecasts an additional $1.5trn in global insurance savings premiums over the next decade, as consumers are moving to buy life-savings products that secure higher retirement incomes. As a result, total global premiums are forecast to grow to $4trn by 2034. In contrast, global life insurance premiums grew by only $300bn in the entire low interest rate decade…

Preparation is the key for smaller defined benefit pension funds that are looking to insure their scheme members’ pension liabilities via a bulk purchase annuity transaction, according to consulting firm Aon. “The pension scheme risk settlement market is buoyant and, although there is some noise about small schemes being crowded out of the market by all the mega deals, this is not what we are seeing in practice,” said Joe Hathaway, Associate Partner in risk settlement at Aon. “In fact, there are increasingly more options and resources available for schemes that are under £150 million in size. This expansion in…

Life expectancy underwriting firm Predictive Resources has promoted Roger Tafoya to President and Chief Underwriting Officer. Tafoya joined Predictive Resources in February 2019 as COO and Chief Underwriter. “Roger is everything we expected and more, and he has directly contributed to Predictive’ s ongoing success,” said Vince Granieri, CEO of Predictive Resources. Prior to joining Predictive Resources, Tafoya was Head of Underwriting New Business and Underwriting R&D for MassMutual, where he led ongoing development of algorithmic underwriting and partnered with clinicians, data scientists, vendors, underwriters, and claims professionals to use digital health data to improve mortality, morbidity and longevity accuracy for both pricing…

UK-based industry group the Society of Pension Professionals (SPP) held an event last week that educated pension professionals with regards to preparing for a bulk annuity transaction.  During the event, the SPP asked the audience – numbering more than 200 – what proportion of their schemes they expected to complete a bulk annuity transaction over the next five years.  Some 54% said that around half would do so and a further 15% said that more than three-quarters of their schemes would do so.  Around a third (31%) of participants said that only a minority of their schemes would do so. “The number of pension…

Consulting and actuarial firm Milliman Inc.’s latest Milliman Pension Buyout Index (MPBI) shows that the estimated cost to transfer retiree pension risk to an insurer in a competitive bidding process increased from 100.3% of a plan’s accounting liabilities (accumulated benefit obligation, or ABO) to 100.9% of those liabilities. That means the estimated retiree pension risk transfer (PRT) cost is now 100.9% of a plan’s ABO. During the same time period, the average annuity purchase cost across all insurers in our index also increased, from 102.6% to 103.3%. The competitive bidding process is estimated to save plan sponsors about 2.4% of…

The US pension risk transfer (PRT) market delivered its largest first quarter on record, according to the latest quarterly Pension Risk Transfer Monitor from Legal & General Retirement America (LGRA). LGRA estimates that $15bn worth of transactions were completed between January and March this year, more than twice that seen in 2023 ($6.3bn) and three times greater than 2022’s $5.3bn. “Jumbo transactions continue to be the driving force behind the market’s strong performance. We saw two such transactions close in Q1 totaling $11bn,” says LGRA in this quarter’s report. LGRA expects total volume in H1 to come in at approximately $22bn, and the…

Legal & General has completed a c.£900m buy-in transaction with the ICI Pension Fund. The deal secures the benefits of over 7,000 retirees. This transaction – the 12th since the ICI Pension Fund entered into an umbrella agreement with Legal & General in 2014 – takes the total value to date to approximately £7bn, covering around 70% of the ICI Pension Fund’s total liabilities. “We are pleased to have deepened our relationship with the ICI Pension Fund in the most recent transaction,” said Andrew Kail, CEO at Legal & General Retirement Institutional. “It falls almost ten years to the day…

Actuarial advisory firm Actuarial Risk Management (ARM) has appointed Raghu Ramachandran as Director of its Life & Annuity insurance consulting practice. Ramachandran’s career includes roles as Head of Insurance Asset Channel at S&P Dow Jones Indices, Chief Investment Officer of a US multi-line insurance company, and an insurance portfolio manager and head of the portfolio strategy group at Brown Brothers Harriman (BBH). “Raghu and I crossed paths 30 years ago when I came to the US, and I have been continually impressed by his capabilities and insights into risk management for insurance company portfolios,” said Corwin Zass, Principal and Founder…

Metallus Inc has entered into an agreement to purchase a group annuity contract from The Prudential Insurance Company of America in connection with the termination of the TimkenSteel Corporation Retirement Plan (Salaried Pension Plan). The transaction settles approximately $121m of the company’s remaining US pension obligations. Prudential will pay future benefits under the group annuity contract starting August 1, 2024, for the remaining approximately 1,000 participants in scheme. “Prudential was carefully selected as a highly rated and experienced retirement benefits provider,” said Kris Westbrooks, Metallus’ Executive Vice President and Chief Financial Officer. “Following the Bargaining Pension Plan partial annuitisation in 2022, the…