FirstEnergy Transfers 2,200 Retiree Pensions to Insurers

FirstEnergy Corp., one of the nation’s largest investor-owned energy utilities, in December 2023 completed a $700 million pension risk transfer transaction with Legal & General Retirement America and Reinsurance Group of America Inc., the insurers announced Thursday.

The retiree lift-out covers about 2,200 retirees—representing about 8% of the total pension liability associated with its former power generation subsidiaries, according to a press release.

LGRA, a division of Banner Life Insurance Co., is the lead administrator and will be fully responsible for the service to and administration of all participant accounts transferred as part of the PRT deal. Aon and K&L Gates also advised FirstEnergy on the transaction.

“Partnering with RGA enables us to deliver a unique risk-management solution to FirstEnergy and its annuitants that is backed by the financial strength and experience of two leading insurance companies,” said George Palms, president of LGRA, in a statement. “We take great pride in our level of dedicated customer service and through this transition, and we look forward to servicing and protecting the retirement income for these participants.”

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According to FirstEnergy, impacted retirees were notified of the change in January and will be contacted by Banner Life this month. Banner Life began as the administrator of the benefits and the primary point of contact for annuity payment questions on March 5.

FirstEnergy stated that the value of a retiree’s pension benefit will not be affected by the transaction, and monthly payments will continue automatically and uninterrupted based on the current direct deposit or paper check payment method.

LGRA and RGA also conducted a $309 million PRT withPPG Industries Inc.in June 2023, which covered more than 4,000 retirees at the Pittsburgh-based Fortune 500 company.

Verizon Communications Inc.this month completed a $5.9 billion pension risk transfer by purchasing single-premium group annuity contracts with two insurers covering 56,000 retirees. The group annuities were provided by Prudential Insurance Co. of America and RGA.

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Tags: annuity contracts, Banner Life Insurance Co., FirstEnergy Corp., Group Annuity, Legal & General Retirement America (LGIMA), Pension Risk Transfer, RGA Reinsurance Co., State Street Global Advisors, Verizon

The Securities and Exchange Commission is facing litigation challenging its climate risk disclosure rule, finalized on March 6, in three suits filed from two sides of the aisle.

The climate risk disclosure rule requires public companies to disclose their material climate risks related to physical and transitional risks, costs related to severe weather events and any strategy they may have to reduce climate risks. Larger companies must also disclose greenhouse gas emissions from their operations and power consumption, known as Scope 1 and Scope 2 emissions, respectively.

The lawsuits come from both sides of the political aisle. Two complaints come from 19 state attorneys general, each from Republican-led states. The first lawsuit was filed on the day the rule was approved with the 11th U.S. Circuit Court of Appeals—which hears cases from Alabama, Florida and Georgia—by 10 states: Alabama, Alaska, Georgia, Indiana, New Hampshire, Oklahoma, South Carolina, Virginia, West Virginia and Wyoming.

The second complaint was filed on Tuesday in the 8th U.S. Circuit Court of Appeals—which hears cases from Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota—by nine more Republican-leaning states: Arkansas, Iowa, Idaho, Missouri, Montana, Nebraska, North Dakota, South Dakota and Utah.

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Both complaints argue that the “final rule exceeds the agency’s statutory authority and otherwise is arbitrary, capricious, an abuse of discretion, and not in accordance with law,” but have not elaborated further.

The Sierra Club, a grassroots environmental advocacy group, also sued the SEC in the U.S. Circuit Court of Appeals for the District of Columbia on Wednesday.

Though that complaint does not spell out its objection, a press release from the Sierra Club argues that the “final rule will yield much less information about companies’ exposure to climate-based risks than the proposed rule would have.”

The organization also wrote that, “[b]y allowing companies to selectively report their emissions, the SEC has fallen short of its statutory mandate to protect investors, maintain fair, orderly, and efficient markets, and promote capital formation.”

The rule was passed by a 3 to 2 vote. SEC Chairman Gary Gensler, a proponent, has said the rule will help investors compare companies more easily by having more uniform climate disclosures.

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Tags: climate disclosure, financial markets disclosure, Gary Gensler, Scope three emissions, Securities and Exchange Commission, Sierra Club