GE  transferred $1.7 Billion in pension liabilities to Athene Annuity and Life Company and Athene Annuity & Life Assurance Company of New York in late 2020. This transaction affects approximately 70,000 retirees who have been receiving benefits from GE’s pension plan. Bermuda based Athene Holding has purchased more than $18.5 Billion in pension liabilities affecting over 300,000 retirees since it entered the pension risk transfer business in 2017.

 

 

 

JCPenney, the ailing retailer, declared bankruptcy in May 2020 and sold off its retail operations before emerging from Chapter 11 at the end of 2020.  In early April, Athene Holding took over $2.8 Billion of JC Penney’s pension obligations, completing the termination of JCPenney’s pension plan. Two of Athene’s wholly owned subsidiaries, Athene Annuity and Life Company and Athene Annuity & Life Assurance Company of New York will issue a group annuity contract to JCPenney and individual annuity certificates to eligible participants. This transaction affects approximately 30,000 JC Penny retirees and is Athene’s largest pension risk transfer transaction to date.

 

 

 

Facts from 2020

First Quarter 2020:

  • “Buy-out” purchases $4.462 Billion

Second Quarter 2020:

  • “Buy-out” purchases were $2.270 Billion

Third Quarter 2020:

  • “Buy-out” purchases were $4.599 Billion

Fourth Quarter 2020:

  • “Buy-out” purchases were $13.680 Billion

Total “Buy-out” contracts for 2020: 432

Total of “Buy-out” purchases: $25 Billion

Total Number of Retirees Affected: 408,277

Philips North America has transferred $1.2 Billion of pension liabilities to MetLife and Principal Financial Group. This transaction affects approximately 11,000 retirees and their beneficiaries. MetLife will administer the benefits and will be financially responsible for 75% of the liabilities. Principal has sole responsibility for approximately 2,000 deferred participants.

 

 

Senior financial reporter for the NBC News Investigative Unit, Gretchen Morgenson delved into the issue of pension de-risking in an exposé published on June 14, 2020. Morgenson interviewed Karen Friedman of the Pension Rights Center, and Thomas Gober, a certified fraud examiner who has worked as a consultant to the U.S. Department of Justice, and Joseph Belth, professor emeritus of insurance at Indiana University, and author of The Insurance Forum.  Focusing on Athene Annuity & Life, Morgenson points out that “Athene has acquired $12 billion in corporate pension obligations recently, including those of Bristol-Myers Squibb, Dana Corp. and Lockheed Martin Corp.” Some 178,000 people now rely on Athene for their pension benefits.  In April 2020, Athene was fined by the State of New York for failing to register before engaging in its pension de-risking business in New York.

On February 1, 2021 American International Group, Inc. agreed to pay a $12 Million fine to the State of New York to settle charges by the New York State Department of Financial Services (NYDFS) that it conducted life insurance business in New York without a license. Between 2014 and 2019, AIG entered into four pension risk transfer (a/k/a pension de-risking) transactions without being licensed in New York. As part of the settlement, AIG will transfer those transactions to its New York based subsidiary. NYDFS’s superintendent, Linda Lacewell is quoted in Business Insurance as saying: “A DFS license offers consumers peace of mind through the requirement of compliance with New York laws and regulations, helping to safeguard assets. The department will continue to vigorously enforce the law to protect retirement assets of New Yorkers.”

Midland, Michigan based Dow Inc. transferred $700 million in pension liabilities to Metropolitan Tower Life Insurance Company, a subsidiary of MetLife Inc. in the 4th quarter of 2020. The transfer affected retirees in the Dow Pension Plan who receive $950 or less in monthly benefits, and retirees in the Union Carbide Pension Plan receiving less than $420 per month. Over 12,000 retirees were impacted by this transfer.

Weyerhaeuser transferred $765 million of its pension liabilities in December, 2020. Weyerhaeuser purchased a group annuity contract from Metropolitan Tower Life Insurance Company, a subsidiary of MetLife. This pension de-risking transaction affects 5,200 Weyerhaeuser retirees.

The Kemper Corporation, an insurance holding company based in Chicago, Illinois completed a transfer of $205 million in pension liabilities to Banner Life Insurance Company. Kemper’s pension plan was closed to new hires on January 1, 2006, and benefit accruals have been frozen since June 30, 2016. Kemper also offered to make lump-sum payments to certain inactive, vested plan participants who were not yet in pay status. $117 million in lump-sum payments were distributed.

General Electric (GE) recently announced that it had transferred $1.7 Billion of its pension liabilities to two insurance companies owned by Athene Holding Ltd.  The two insurance companies are Athene Annuity and Life company and Athene Annuity & Life Assurance Company of New York.  The pension risk transfer, or pension de-risking transfer affects approximately 70,000 GE retirees and beneficiaries whose pension benefits were less than $360 per month.   This pension de-risking transfer follows GE’s decision to pre-fund $2.5 Billion of its GE Pension Plan funding requirements for 2021, 2022, and 2023.