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L&G’s U.S. pension risk transfer business approaches $1 billion

23rd February 2017 - Author: Luke Gallin

UK insurer Legal & General (L&G) has revealed that its U.S. pension risk transfer (PRT) business witnessed further growth in 2016 and the unit expects to surpass $1 billion in transaction volume in the near future, citing increased demand for its services across the states.

The UK domiciled insurer entered the U.S. market less than 18 months ago, resulting in Legal & General Retirement America (LGRA) completing its first U.S. deal in October of 2015 with the U.S. subsidiary of Royal Philips, for roughly $450 million.

The following year saw the firm’s U.S. subsidiary complete transactions with six additional clients, including the Diocese of Palm Beach, The Foundation Resolution Corporation and the Honolulu Museum of Art, resulting in 2016 new business amounting to roughly $450 million.

This means that since it entered the U.S. market roughly 18 months ago the firm’s U.S. PRT business is roughly $900 million in total volume, driven by its expansion of clients and reach in the U.S. amidst continued demand for its services.

Group Chief Executive Officer (CEO), Nigel Wilson, said; “We’re well on our way to surpass a milestone of over $1 billion in volume in less than two years, further emphasizing our view that the US market can benefit from our extensive background and decades of experience of being a global leader in pension de-risking.”

“With our expanding role as a pension partner in the US, we’ve built a deeply experienced team that is dedicated to the PRT market. In addition to our Stamford, Connecticut-based business team, we also have been able to draw upon the tremendous capabilities within our other US entities for investments and administration. Our unique ability to bring a wealth of expertise and experience, combined with the nimbleness and innovation we bring as a young player in the US space has been extremely well received by the market,” added George Palms, President, LGRA.

The firm attributes its early success in the U.S. to its ability to provide a broad scope of transaction structures, which improves the capacity to price complex transactions. The firm has more than 30 years of PRT business experience in the UK and combined with its proven U.S. investment capabilities, supports its entry into the U.S. As of June 30th, 2016, the Group had amassed a global annuity book of more than $68 billion.

CEO of Legal & General Retirement (LGR) and recently appointed Group Executive Director of the Company, Kerrigan Procter, said; “We are very pleased with our initial successes in the US and see great opportunity over the next several decades. We will continue to invest heavily in our international expansion and intend to be a major player as we steadily grow our position in the US market.”

Head of Distribution and Retirement Solutions for LGRA, Kim Lisella Rosenberg, commented; “As we enter 2017, demand continues to build for insurers that are flexible and highly responsive to dynamic client needs. We fully intend to be on the forefront of this rapidly evolving market and continue to emphasize our highly collaborative approach with clients.”

The Legal & General pension risk transfer business often operates in tandem with the firm’s reinsurance arm Legal & General Re (L&G Re) in providing these solutions to enhance pensions funding profiles.

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