U.S single premium pension buy-out product sales surpassed $8.2 billion in the second quarter of 2018, more than doubling sales totals for Q2 2017, according to a quarterly survey by the LIMRA Secure Retirement Institute (LIMRA SRI).
LIMRA SRI also noted that Q2 2018 marked the 13th consecutive quarter of sales above $1 billion and the highest second quarter results on record for the past 15 years.
Year-to-date sale were also found to total $9.6 billion, 76% higher than prior year, and LIMRA SRI projected that the pension risk market will exceed $23 billion in 2018.
“Several large pension risk buy-out contracts — announced since the beginning of the year — were reported in the second quarter, driving the overall growth,” said Eugene Noble, Research Analyst at LIMRA SRI.
“We expected more activity in the pension risk transfer market as plan sponsors take advantage of the ability to make tax-deductible contributions at a higher rate before the new rates kick in as a result of the tax reform law,” he added.
Total assets of buy-out products were also over $121 billion in the second quarter, almost 23% higher than the prior year, while survey respondents reported 108 new contracts in Q2 2018.
“While market growth in previous quarters has been from small- to medium-sized plans, this quarter the majority of the growth came from large plan transfers,” Noble explained. “Recent LIMRA SRI research shows that large plan sponsors are more familiar and have growing interest in pension risk transfers.”
LIMRA SRI’s survey, which polled 15 companies across the U.S market, confirms a recent report by re/insurance broker Willis Towers Watson, which suggested that 2018 is set to be a record year for pension de-risking.
