Market snapshot for Q1 2021
The LIMRA Secure Retirement Institute recently released the following statistics about the pension risk transfer (PRT) market for the quarter ending March 31, 2021:
- 42 group annuity buy-out contracts were transacted in Q1 2021 worth $1.0 billion in premium
- 1 group annuity buy-in contract worth $2.8 billion in premium was transacted in Q1
- 18 insurers participated in the quarterly survey (representing all insurers in the PRT market as of June 2021)
Market outlook for 2021
The Secure Retirement Institute reported that the $2.8 billion buy-in during Q1 2021 marked the largest buy-in to-date in the U.S. Meanwhile, we note that the $1.0 billion in aggregate buy-out premiums during Q1 was the lowest quarterly total since Q2 2016. From LIMRA Fact Tank data, we estimate:
- $179.4 billion in buy-out premiums since 2012
- 7.6 billion in buy-in premiums since 2014
| Updated PRT sales projection for 2021 The PRT market has averaged just under $26 billion per year in buy-out premiums during 2017-2020. In its first projection of the year, LIMRA estimates PRT sales might be in the $25-$30 billion range during 2021. |
JCPenney and Athene transact buy-in On April 1st, Athene Holding Ltd. announced the completion of a $2.8 billion buy-in contract in conjunction with JCPenney’s termination of its 30,000-life pension plan. Prior to this transaction, the largest buy-in in the U.S. was $0.9 billion. |
| Insurer capacity As we move into the summer months, PRT activity is already picking up. Based on LIMRA’s projections, on top of a slower Q1, we anticipate that insurers’ transaction calendars will fill up quickly in Q3 and Q4. |
PRT insurers in the news MassMutual’s acquisition of Great American Life was completed on May 28th. Since Great American had been a PRT insurer prior to the acquisition, the total number of insurers in the PRT market now stands at 18. |
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For more information on PRT or pension risk management, please contact:
- Tom Sablak at 617-448-5582 or Thomas.Sablak@buck.com
- Sarvesh Soi at 312-350-1478 or Sarvesh.Soi@buck.com