In its report on 3rd quarter results, Owens Corning announced it has entered into an annuity contract with an insurance company to transfer $89 million of U.S. pension plan liabilities along with $83 million in plan assets.
In an email to PLANSPONSOR, the company said the population includes retirees in payment mode. Owens Corning purchased an annuity contract whereby the approximately 2,000 individuals with small benefits (<$600 per month) will receive their payments from the insurance company going forward instead of the company.
Owens Corning says it ran a competitive process selecting Securian as the counterparty.
“The Company benefits by transferring an asset value ($83MM) less than the liability value ($89MM). Further, the Company is no longer exposed to asset returns, discount rates and longevity for this population. Lastly, the Company saves on administrative cost and PBGC [Pension Benefit Guaranty Corporation] premiums,” the company said in the email.
The transaction will settle in the fourth quarter and will result in a non-cash charge of approximately $45 million from accelerated recognition of past actuarial losses. The transaction is not expected to have a material impact on the plan’s funded status.
« Points to Consider When Evaluating TDFs