Pension Risk Transfer (PRT) Market - Strong in 2018
- PRT annuity premiums increased to a record $27.5 B, up 22%.
- Executed deals by transaction count increased 24%.
2018 PRT Market Trends
Competitive Pricing Continued
- Nearly two-thirds of deals closed at or below benchmark FTSE PBO, while the insurer-pricing range averaged 2% above FTSE PBO.
- Large deals ($100 M+) received even more competitive pricing – with some closing at PBO or lower.
- Insurers maintained sufficient financial and resource capacity supporting favorable PRT market.
Repeat Transactions Reigned
- Plan sponsors decided to “do it again” through repeat transactions.
- Some companies transacted their fourth consecutive deal.
- Favorable experience and execution ease were two factors driving this trend.
Aon’s Pension Risk Transfer Future Trends to Watch in 2019
- PRT pricing to remain attractive
- Plan terminations to stay active
- Cybersecurity protection to be essential
- Governance and risk mitigation strategies to continue unimpeded
- U.S. annuity buy-in to receive greater consideration
Why Some Sponsors Have Not Transacted (in a very active market)
- Lower future pension income resulting from annuity settlement
- Low current pension plan funded status
- No time or resources to transact
- High desire to wait and terminate the entire plan
- Low or no appetite to trigger settlement accounting
For more information on the 2019 US Pension Risk Transfer Market, download the full whitepaper here.
PRT Insurer Marketplace Remains Vibrant; Active Participants:
AIG, Athene, CUNA Mutual, Great American, Legal & General, Mass Mutual, MetLife, Mutual of America, Mutual of Omaha, New York Life, One America, Pacific Life, Principal, Prudential, Securian and Western & Southern.
© Aon plc 2019. All rights reserved.