Entergy to Transfer $1.2B in Pension Liabilities

In a busy year for pension risk transfer transactions, energy provider Entergy will transfer $1.157 billion in pension liabilities to Metropolitan Life Insurance Company, Entergy announced in an 8-K SEC filing on May 24.

Entergy, which provides electricity to roughly three million customers in Arkansas, Louisiana, Mississippi and Texas, entered the agreement with MetLife on May 23, which will cover 3,447 retirees and other beneficiates who received benefit payments on or before March 1, 2024.

Entergy’s retirees and beneficiaries will continue to receive their benefits until September 1, 2024, after which MetLife will assume responsibilities for the liabilities associated with this group. 

Many large pension risk transfer transactions were announced this year. In March, Verizon announced a $5.9 billion PRT with Prudential and RGA Reinsurance, for 56,000 beneficiaries. In February, Shell closed a $4.9 billion PRT with Prudential. 

The pension’s portfolio has a 32% allocation to domestic equities, 17% to international equities, 8% to intermediate fixed income and 43% to long-duration fixed income, as of the end of 2023. According to the company’s 10-K, Entergy’s four pension plans had $5.5 billion in assets, and $5.6 billion in liabilities.

According to investment consultant Aon, 2024 could be another year where annuity buyouts exceed $40 billion. In 2023, there were 773 PRT transactions totaling more than $45 billion in premiums. In Q1, $15 billion in PRT transactions occurred, according to Legal & General Retirement America.