WINDSOR, Conn., March 18, 2019—U.S. single premium pension buy-out product sales exceeded $10.4 billion in the fourth quarter of 2018, nearly level with fourth quarter 2017 results. This is only the third time fourth quarter sales have surpassed $10 billion, according to LIMRA Secure Retirement Institute’s quarterly U.S. Group Annuity Risk Transfer Survey.
“Sales tend to be larger in the end of the year. We’ve seen buy-out sales over $5 billion in the fourth quarter going back to 2014,” noted Eugene Noble, research analyst, LIMRA Secure Retirement Institute. “This also marks our fifteenth consecutive quarter with over $1 billion in sales.”
In 2018, single premium buy-out product sales peaked at $26 billion, more than 14 percent higher than 2017. Total single premium product sales (including buy-ins) exceeded $11.3 billion in the fourth quarter 2018. For the year, total single premium product sales were $27.3 billion.
“A big driver of the 2018 buy-out sales was a combination of mid-to-large PRT deals,” said Noble. “We also saw two new insurance companies enter the PRT market this year.”
Total assets of buy-out products were $135.5 billion in 2018, more than 18 percent higher than prior year. Survey participants reported 29,632 contracts sold as of December 31, 2018.
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.
Seventeen companies participated in this survey. A breakout of pension buy-out sales by quarter since 2012 is available in the LIMRA Fact Tank.
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