First Pension Risk Transfer Database to Serve US Defined Benefit Plan Sponsors and Advisors

(September 26, 2011) — With pension risk transfer deals gaining traction, CAMRADATA Analytical Services has announced the launch of a new database to support defined benefit plan sponsors and advisors in the United States contemplating pension risk transfer (PRT).

“The first US pension buy-in transaction was announced recently and we suspect there are many more plan sponsors considering some type of PRT solution,” US Regional Head of CAMRADATA Steve Keating said. “The PRT database provides an industry-wide view on the risk transfer solutions currently available to plan sponsors and their advisors in the US market.”

Keating added: “It is possible to effectively de-risk defined benefit plans with annuity buy-in and buy-out solutions. The key questions are how, when, with whom and at what cost? We have developed the PRT product database to help plan sponsors.”

CAMRADATA’s new database offers registered users with a source for insurance company organizational information, pension buy-in and buy-out product fact sheets, and screening tools, pricing data, up-to-date information on each PRT provider’s financial strength and relevant industry research, as outlined in a statement by the firm.

The launch of the database follows Prudential Retirement’s completion of its first US buy-in with a $75 million pension risk transfer in late May. North Carolina-based Hickory Springs Manufacturing Company selected Prudential’s Portfolio Protected Buy-in to complete the pension risk transfer transaction.

“With the help of our advisor BCG Terminal Funding Company, we selected Prudential Retirement because of its flexibility in structuring a solution that we feel will help us fulfill our fiduciary obligations and enhance our employees’ retirement security,” said Steve Ellis, Chief Financial Officer of Hickory Springs, in a statement. “We were impressed with the Prudential Retirement team’s expertise and continued focus on our business needs.”

On the other side of the Atlantic, the number of such pension risk transfer deals in the UK market has been growing in recent years as pensions seek to transfer their risk to banks and insurers. Pension consultancy Hymans Robertson recently showed that with $7.2 billion (£4.5 billion) of risk transfer deals completed last year, the rest of 2011 looks to be a record for the number of buyin and buyout deals completed in the UK. James Mullins at Hymans stated in a release that by the end of 2012, one in four FTSE 100 companies would have completed either a buyout or a buyin.

“Our analysis illustrates that it won’t be long before £50 billion of pension scheme risk has been transferred to insurance companies and banks,” Mullins said. “2010 was the third successive year during which £8 billion of pension scheme risks were transferred via buy-ins, buy-outs and longevity swap deals. 2011 is likely to see a substantial increase above these levels.”