US. Pension risk transfer market posts record-breaking 2021
The U.S. pension risk transfer market had a record-breaking year in 2021, with an estimated total volume of between $38 billion and $40 billion, according to a report from Legal & General Group.
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In the insurer’s latest Pension Risk Transfer Monitor, issued Tuesday , the U.S. PRT market’s volume for the year well exceeded the total of $27 billion for 2020, and also exceeded the previous record of $36 billion posted in 2012.
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While the majority of the total in 2012 was attributed to a single transaction — General Motors Co., Detroit, completing a $26 billion pension plan buyout — the volume of the past year was attributed to 10 transactions that closed at or above $1 billion.
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For the quarter ended Dec. 31, Legal & General estimated total volume to be between $12 billion and $14 billion, down from an estimated $16 billion in the third quarter.
The high transaction volume during the entire year was fueled by strong equity returns and rising interest rates, the report said. Both are responsible for rising funding ratios that allow corporate pension plans to use plan assets to pay premiums to insurance companies for these buyout transactions.
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