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Pension Risk Transfer Appetite is Unabated

Legal & General Retirement America’s Pension Risk Transfer Monitor shows the U.S. pension risk transfer (PRT) market has remained very active throughout the first three quarters of 2019.

Relative to the same period in 2018, this year has seen a 12% increase in total deal count. According to the report, the total premium paid only increased by 1%, largely due to an “outlier transaction” in the second quarter of 2018, when FedEx entered into a $6 billion PRT transaction. Excluding the FedEx transaction, the total premium increase is nearly 53%.

The analysis shows plan terminations accounted for just under $4 billion of sales in the first half of this year, nearly surpassing total plan termination sales in 2018.

Legal & General Retirement America projects that this year’s final deal volume will approach, but not reach, the record level set in 2012. Looking back, 2013 saw far less PRT activity than 2012, but each year since 2013, the PRT transaction total has increased or remained essentially flat, as was the case between 2015 and 2016.

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