Record $15B in Pensions Transferred to Insurers in Q1

The first quarter of this year marked was the largest first quarter on record, as estimated $15 billion in pension risk transfers closed in the period. According to Legal & General Retirement America, the activity significantly outperformed the previous record of $6.3 billion in 2023 and nearly triple the 2022 amount of $5.3 billion.

LGRA found that jumbo transactions continue to be the driving force behind the market’s strong performance, as two transactions that closed in Q1 totaled $11 billion. Verizon Communications Inc. completed a$5.9 billion PRT dealwith Prudential Insurance Co. of America and RGA Reinsurance Co. in March, and Shell USA, Inc. completed a $4.9 billion deal withPrudentialin February.

In addition, LGRA stated in its new market update that U.S. pension funding status remains high and plays a role in the number of transactions that come to market. For example, in April 2024, the U.S. pension funding ratio was 107.6%, according to LGIM America.

As funded levels stay elevated, LGRA predicts that there will be continued demand for de-risking from plan sponsors who are in a good position to complete a PRT.

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However, in ananalysisof U.S. pension funded status in April, actuarial and investment consulting firm Agilis cautioned that pension plan sponsors looking to go through with a PRT may “want to do so quickly,” as the likelihood the Fed will drop interest rates this year could rise depending on how economic data turns out in the coming weeks and months.

Looking ahead, LGRA estimated the first half of 2024 will close at around $22 billion in PRT transactions, which is in line with what was seen in the first half of 2023. With jumbo transactions driving the most total market volume, LGRA expects at least three more to close this year.

Aon’s recent U.S. Pension Risk Transfer Reportpredictedthat the PRT market will likely exceed $40 billion in premiums by the end of 2024. In addition to funded status improvement and higher interest rates, Aon attributed growing interest in PRTs to increasing Pension Benefit Guaranty Corporation premiums. In 2024, premiums rose to $101 per participant and $52 per $1,000 for the underfunded variable rate, Aon found.

Tags: Agilis, Aon, Legal & General Retirement America (LGIMA), Pension Risk Transfer, Prudential Insurance Co. of America, RGA Reinsurance Co., Shell USA, Verizon

Intercontinental Exchange, the parent company of the New York Stock Exchange, agreed to pay the Securities and Exchange Commission a $10 million penalty to settle charges that it failed to inform the regulator in a timely manner of a cyber intrusion at nine of its wholly owned subsidiaries, including the NYSE.

According to the SEC’s cease-and-desist order, Intercontinental Exchange was informed in April 2021 that it was potentially impacted by a system intrusion involving a vulnerability in the company’s virtual private network. In addition to the NYSE, the subsidiaries included Archipelago Trading Services, NYSE American, NYSE Arca, NYSE Chicago, NYSE National, ICE Clear Credit, ICE Clear Europe and the Securities Industry Automation Corp.

The SEC said Intercontinental Exchange investigated the matter and immediately determined that malicious code had been inserted into a VPN device used to remotely access the company’s corporate network. However, it alleged the company didn’t notify legal and compliance officials at its subsidiaries about the breach for four days.

The regulator said that this not only violated Intercontinental Exchange’s own internal cyber incident reporting procedures, but it was also in violation of the SEC’s Regulation Systems Compliance and Integrity rule.

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The regulation requires listed companies to immediately contact the SEC about a cyber intrusion and provide an update within 24 hours, unless they immediately conclude that the intrusion had or would have no or minimal impact on their operations or on market participants.

“The reasoning behind the rule is simple: if the SEC receives multiple reports across a number of these types of entities, then it can take swift steps to protect markets and investors,” Gurbir Grewal, director of the SEC’s Division of Enforcement, said in a statement.

He added that Intercontinental Exchange “failed to notify the SEC of the intrusion at issue as required. Rather, it was Commission staff that contacted the respondents in the process of assessing reports of similar cyber vulnerabilities.”

Intercontinental Exchange and its subsidiaries consented to the SEC’s order finding that they violated the notification provisions of Regulation SCI and that the company caused those violations. Without admitting or denying the regulator’s findings, Intercontinental Exchange and its subsidiaries agreed to the cease-and-desist order in addition to the $10 million penalty.

“This settlement involves an unsuccessful attempt to access our network more than three years ago,” an ICE spokesperson said in an emailed statement. “The failed incursion had zero impact on market operations. At issue was the timeframe for reporting this type of event under Regulation SCI.”