Molson Coors Brewing Co. has agreed to purchase a group annuity contract from Athene Annuity and Life Co. in a move to de-risk the pension plan of its subsidiary MillerCoors LLC.
Under the terms of the deal, Athene will assume from the MillerCoors Pension Plan obligations to pay future pension benefits to more than 6,000 retirees and beneficiaries. As a result of the transfer, MillerCoors will reduce its pension projected benefit obligation by more than $900 million.
Beginning May 1, 2018, Athene will begin making benefit payments to the affected plan participants, and will also provide ongoing administrative services. The pension plan’s participants will receive the same monthly benefit they were previously receiving from MillerCoors. Molson Coors said the move is intended to reduce the overall size of the pension plan, future cost volatility, and annual plan administrative expenses.
State Street Global Advisors was hired an independent fiduciary to evaluate and choose the insurer based on financial strength, qualifications, and overall capabilities. Willis Towers Watson served as strategic advisors, and Jones Day provided the legal counsel for MillerCoors in the deal.
In the company’s most recent quarterly report, Molson Coors said it made an additional, discretionary contribution of $200 million to its US defined-benefit pension plan in the third quarter as part of its deleveraging goals. It also said it expected to make a total of approximately $310 million in cash pension contributions for 2017.
Other companies that have made similar moves to de-risk their pension plans by purchasing a group annuity over the past several months include The Ball Corporation, a packaging and aerospace company; financial services firm The Hartford; computer hardware company NCR Corp.; and newspaper publishing companies A.H. Belo and The New York Times Co.
Tags: Athene Annuity & Life Company, Group Annuity, LDI, MillerCoors, Pension