US Pension Buyout Sales Jump 148% in Second Quarter

U.S. single premium buyout sales set a second-quarter sales record of $12.3 billion this year, a 148% jump from $4.97 billion during the same period last year, according to LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey.

It was the second straight quarter during which buyout sales saw a triple-digit percentage increase, following a 163% increase in buyout sales during the year’s first quarter. There were no buy-in contracts sold in the second quarter.

“While the U.S. pension risk transfer market record-setting results were propelled by several jumbo deals (over $1 billion) in the second quarter, growth was widespread with almost two-thirds of the companies reporting sales increases and the overall number of transactions climbing 63%,” Mark Paracer, assistant research director, LIMRA annuity research, said in a statement.

Buyout and buy-in sales were $17.6 billion during the first half of the year, a 101% increase from the previous year, and smashing the former sales record of $9.7 billion set in the first half of 2018. In the first six months of the year, there were 221 contracts sold, which is 69% more than were sold in the first half of 2021.

Single premium buyout assets rose 20% from the year-earlier quarter to $202.5 billion in the second quarter, while single premium buy-in assets increased 12% from the year-ago quarter to $6.65 billion. Buy-in and buyout single premium assets were $209.2 billion combined in the quarter, a 19% increase from the second quarter of 2021.

“The pension risk transfer market is experiencing several tailwinds that are driving the record growth we are witnessing,” said Paracer. “Increased market volatility, rising interest rates and escalating costs to maintain plans are all presenting challenges to plan sponsors. Our research shows there is growing plan sponsor interest in de-risking their pension liabilities. LIMRA expects 2022 to be another strong year for pension risk transfer sales.”