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PIMCO's El-Erian Envisions a European Recession

According to PIMCO's Mohamed El-Erian, European growth will stall over the coming year as volatility will persist.

(September 26, 2011) — Mohamed El-Erian of Pacific Investment Management Co. (PIMCO), which runs the world’s biggest bond fund, is forecasting a European recession in 2012.

El-Erian, chief executive officer of PIMCO — with $1.34 trillion in assets under management — has asserted that there will be little-to-no economic growth in industrial nations over the next year as Europe’s economy contracts by up to 2%. Meanwhile, he said that the US will stagnate yet volatility will continue as a result of policymakers in Europe and the US having failed to take corrective action.

“For the next 12 months, the global economy will slow materially with advanced economies struggling to grow much above zero. Emerging economies will maintain faster growth, albeit not as high as the last 12 months,” Bloomberg cited El-Erian as saying during a September 24 interview in Washington. His comments come as world leaders gathered in Washington over the weekend for annual meetings of the International Monetary Fund (IMF) and the World Bank.

When asked for his thoughts on the crisis and about the seriousness of the situation by TheStreet, El-Erian replied: “This is a serious situation because the crisis in Europe is spreading. It’s still spreading today. So, not only have the Europeans not been able to contain it to Greece, they haven’t even been able to contain it to the periphery.”

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Last month, El-Erian voiced similarly negative views on the economic outlook of the US and the debt ceiling deal in Washington, saying that the deal won’t fix the root of the problem draining the nation’s economy. “The key issue…is that we simply cannot generate enough growth to get us over all these issues,” El-Erian said in an interview with CNBC. “Therefore, we have these structural headwinds that continue to slow us down. Until we see structural solutions we’re going to be stuck on the bumpy road to a new normal.”



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742
Home > News > Newsmakers > First Pension Risk Transfer Database to Serve US Defined Benefit Plan Sponsors and Advisors
Newsmakers

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

CAMRADATA Analytical Services has announced the launch of a new pension risk transfer (PRT) product database.

(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.

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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.”



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

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