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PRT Deals Can Have ‘Positive Impact’ on Companies’ Market Values

June 17, 2020

The share prices of companies that have transferred their pension obligations to an insurer typically perform better than their peers’, according to analysis by Mercer.

The firm found that in general, undertaking a pension risk transfer (PRT) does not appear to be hindrance, with “reasonable evidence” that it can have a positive impact on the sponsor’s market value.

According to the report, over half of the firms analysed had share prices that outperformed their peer group at each measurement point.

Furthermore, as an “overall average”, around two thirds of the companies had share prices that outperformed their peers, compared to one third which underperformed.

It also revealed that the average amount of outperformance of a company’s share price relative grows over time after the announcement, ranging from 0.25 per cent to 3 per cent depending on the time elapsed.

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