Buck Bond Group
Update: U.S. pension risk transfer market insights – December 2021

Update: U.S. pension risk transfer market insights – December 2021

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Market snapshot for Q3 2021

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The LIMRA Secure Retirement Institute recently released the following statistics about the pension risk transfer (PRT) market for the quarter ending September 30, 2021:

  • 118 group annuity buy-out contracts were transacted in Q3 2021 worth $15.8 billion in premium
  • 2 buy-in contracts were transacted in Q3 totaling just under $700 million in premium
  • 19 insurers participated in the quarterly survey (representing all insurers in the PRT market as of September 2021)

Market outlook for 2022

The Secure Retirement Institute reported that group annuity sales (including buy-outs and buy-ins) totaled $25.3 billion during the first 9 months of 2021. From LIMRA Fact Tank data, we estimate:

  • $40.6 billion in total group annuity sales for the 12-month period ending September 30, 2021
  • $200.2 billion in buy-out premiums since 2012
  • $8.3 billion in buy-in premiums since 2014
Will 2021 be the biggest year ever?
With $25.3 billion in group annuity premiums transacted through September 30, 2021, a Q4 of $10.7 billion or more in transactions will push 2021 over the prior record of $36 billion set in 2012.
Insurer capacity
Q3 and Q4 remain the busiest time of the year for PRT: 68% and 73% of annual transactions occurred in the second half of the year in 2019 and 2020, respectively. The percentage will be even higher for 2021. Take-away: Plan ahead.
2021: A record year for buy-ins
Through September 30, 2021, buy-in premiums totaled $3.5 billion (with more already confirmed in Q4). This means that the calendar 2021 total for buy-ins will be the largest ever.
What’s in store for 2022
Past transaction data is not always a perfect predictor of PRT sales, but recent trends, insurer capacity, and the relative improving funded statuses of pension plans all suggest that group annuity momentum will continue into 2022.

 

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