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.
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