Pension Markets

U.S. Pension Risk Transfer Premium Jumps 53% In Fourth Quarter 2023

A record-high number of contracts were completed in 2023

A new report from LIMRA single-premium buy-out sales totaled $12.5 billion in the fourth quarter, up 73% from prior year.

WINDSOR, Conn., March 28, 2024 —Total U.S. pension risk transfer (PRT) premium was $12.7 billion in the fourth quarter 2023, 53% higher than fourth quarter 2022, according to LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey.

“Fourth quarter PRT sales historically tend to be elevated and we saw this again in 2023. Plan sponsors often want to close the deal before the end of the year to remove some of the pension risk off their books,” said Keith Golembiewski, assistant vice president, head of LIMRA Annuity Research. “Strong economic conditions have encouraged more plan sponsors to think about derisking their pension liability. We continue to see a record-level number of deals, suggesting broader awareness and interest in these contracts. LIMRA expects this trajectory to continue with 2024 PRT sales results similar to the results seen 2022 and 2023.”

In 2023, PRT sales were $45.8 billion. While this is 13% lower than the record set in 2022, it does represent the second highest annual sales since LIMRA began its benchmark study.

LIMRA’s findings show there were 296 PRT contracts sold in the fourth quarter, up 26% year over year. In 2023, there were 850 PRT contracts completed, a 25% jump from 2022.This is the highest number of contracts sold in a quarter and annually.

Single-premium buy-out sales were $12.5 billion in the fourth quarter, up 73% from prior year’s results. In 2023, buy-out sales fell 14% to $41.3 billion, as compared to the record buy-out sales in 2022. There were 280 buy-out contracts in the fourth quarter, up 40% from the fourth quarter 2022. For the year, there were 763 buy-out contracts completed, 36% higher than the number of buy-out contracts sold in 2022.

Strong economic conditions have encouraged more plan sponsors to think about derisking their pension liability. We continue to see a record-level number of deals, suggesting broader awareness and interest in these contracts...

There were no buy-in contracts reported in the fourth quarter. At year-end 2023, there were eight buy-in contracts sold, totaling $3.9 billion.

Single premium buy-out assets reached $263.4 billion in 2023, up 12% from the prior year. Single premium buy-in assets were $6.9 billion, 2% higher than in 2022.* Combined, single premium assets were $268.5 billion in 2023, an 11% increase from the 2022 results.

A group annuity risk transfer product, such as a pension buy-out product, allows an employer to transfer all or a portion of its pension liability to an insurer. In doing so, an employer can remove the liability from its balance sheet and reduce the volatility of the funded status.

LIMRA Fact Tank

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.

 

 

 

*Two single-premium buy-in contracts were converted into buy-out contracts in the fourth quarter, lowering the total assets.
About LIMRA
Serving the industry since 1916, LIMRA offers industry knowledge, insights, connections, and solutions to help more than 700 financial services member organizations navigate change with confidence. Visit LIMRA at www.limra.com.

 

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