PRT Transactions Surged in First Quarter of 2019

Data from LIMRA Secure Retirement Institute shows a 240% increase in pension risk transfer activity in the first quarter of 2019 relative to the same period in 2018.

According to new data shared by the LIMRA Secure Retirement Institute (LIMRA SRI), U.S. single premium pension buyout product sales surpassed $4.7 billion in the first quarter 2019.

LIMRA SRI’s data suggests this is an increase of 240% compared with first quarter 2018 results, making for the highest first-quarter pension risk transfer (PRT) sales total in over 30 years. This data comes from LIMRA SRI’s U.S. Group Annuity Risk Transfer Survey.

“Buyout products had a very strong start to the year with $4.7 billion in sales,” says Mark Paracer, assistant research director for LIMRA SRI. “Previous first quarter sales had never exceeded $1.5 billion.”

Notably, LIMRA SRI finds the increase in sales was not limited to just one or a few insurance companies. Rather, two-thirds of companies engaging in PRT transactions reported higher first quarter sales compared to the previous year.

According to LIMRA SRI, total assets of buyout products increased 15% over the first quarter 2018, reaching $139 billion. Survey participants reported 29,417 contracts sold as of March 31, 2019.

“The spike in sales in the first quarter was driven by strong small and mid-sized deals and one large deal,” Paracer explains. “Typically large buyout deals have occurred during the third and fourth quarters.”

The data shows total group annuity risk transfer sales in the first quarter of 2019 reached at $4.9 billion. This is a 213% increase from the same quarter last year, according to LIMRA SRI.

While some pension industry experts point to reasons why PRT transactions may not make sense today for certain pension plans, others argue that over the long term a greater and greater amounts of PRT activity is inevitable.