We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • Why PRT Deals Are Important For Annuities: Opinion

    October 6, 2014 by Linda Koco

    News of developments in the pension risk transfer (PRT) market may draw scant interest from annuity professionals, especially those in the retail market. Let’s revisit that.

    The reason for scant interest may be a simple matter of focus. By definition, PRTs shift some or all of an employer’s pension obligations to a third party such as an insurance company. This may cause individual, non-qualified and retail annuity specialists to view the deals as being “corporate” or “benefits” matters beyond their scope and available time.

    That’s rational but it may not be strategic. Here’s why. Although many of the deals involve transfer of administrative and related services, other deals involve transfer of longevity risks to group annuities. In fact, many of the mega-deals in PRTs involve purchase of group annuities.

    This puts a kind of glow around the annuity word and around the concept of using annuities for guaranteed retirement income.

    That glow comes with a nice complement of trust. This is the trust that the employer has placed in the carrier selected for the PRT program and in the group annuity that’s being used to fulfill the employer’s pension obligations. Trust like that is hard to ignore.

    What brings all this to mind is the news that Prudential has signed yet another big PRT agreement. The insurance company will take over copy.4 billion in U.S. pension obligations of Bristol-Myers Squibb, which will purchase a group annuity from Prudential for that purpose. The deal will cover pension obligations for approximately 8,000 U.S. retirees and their beneficiaries, with no change in their current monthly retirement benefit payments.

    The agreement comes on the heels of September’s news that Prudential will be assuming $3.1 billion in pension obligations of Motorola Solutions, also via a group annuity and also with no change in the affected retirees’ benefits. Prudential was also the group annuity provider for the highly publicized PRT deals in 2012 involving $25 billion in pension obligations at General Motors and approximately $8 billion in pension obligations at Verizon.

    Prepare for more of the same. First of all, other carriers are in the PRT market too. Second, PRT transactions are gaining favor among plan sponsors because they ensure benefit payments while also reducing longevity risk and helping manage plan maintenance costs. In February, analysts at A.M. Best said they foresee potential growth in this market over the next decade.

    In no way, shape or form are group annuities and PRT deals in the same marketplace as individual, non-qualified and retail market annuities. The PRTs are subject to rules of the federal Employee Retirement Income Security Act (ERISA) and to terms and conditions agreed upon by a wide assortment of business and vested interests. The individual/retail annuities are subject to state regulation (and in the case of variable annuities, also federal authorities), and to provisions in an individual policy offered by a carrier, often with the assistance of an advisor, and agreed to by a consumer. The PRTs can involve up to billions of dollars in collective pension obligations while an individual/retail annuity can involve anywhere from a few thousand dollars to upwards of a million dollars of premiums paid by an individual policyowner.

    Still, PRT deals get a lot of publicity in the consumer media, often because the outcome affects so many retirees. The news reports typically mention that the employer has purchased a group annuity, and that the annuity will continue the benefit payments as before. Those mentions add up. The annuity word gets passed around, typically in a positive light.

    Since annuity professionals stand to benefit from that light, keeping tabs on PRT developments seems like a pretty smart thing for them to do. If the PRT subject comes up in conversation, the professional will be in an ideal position to provide contextual insight on the role of annuities and the guaranteed income stream they provide.

    This is in addition to the salutary benefits that professionals get from becoming informed about industry issues and trends beyond their specialties.

    Originally Posted at InsuranceNewsNet Blog on October 6, 2014 by Linda Koco.

    Categories: Industry Articles
    currency