Brace yourself for shocking news: Summer is hot. But this year, at least, that’s not limited to thermometers—pension risk transfers (PRTs) have heated up, according to recent reports. 
Highest Ever for Q2
PRTs in the United States in the second quarter of 2023 were the highest for any second quarter LIMRA has measured, it reports in its latest U.S. Group Annuity Risk Transfer Sales Survey.
LIMRA reports that U.S. PRTs amounted to $16.2 billion in the second quarter. That was higher than any second quarter they had measured, and it was a whopping 31% higher than the second quarter in 2022. Similarly, in its U.S. Pension Risk Transfer 2023 Mid-Year Update, AON reports that PRTs in the second quarter amounted to $16.1 billion.
LIMRA also reports that single-premium buy-out sales in the second quarter were the highest they had measured for any second quarter, and came to $14.6 billion—18% higher than the second quarter one year before.
Hottest Year So Far
The heat generated by pension risk transfers in the second quarter is part of the trend that has held sway since New Year’s Day, LIMRA further reports.
They say that in the first half of 2023, PRT sales came to $22.5 billion, 28% higher that those of the first half of 2022. Mark Paracer, assistant research director of LIMRA annuity research, in a press release attributed the results for the first half of 2022 to record sales, as well as “robust growth in contracts,” which he said is “a newer trend.”
But LIMRA is not alone in finding that the first half of 2023 was a hot time for PRTs. AON says it found that in the first half of the year, the PRT market “saw its highest ever volume of premium and number of transactions placed” and reported a sales figure almost equivalent that LIMRA did: $22.4 billion.
AON reports that not only did the number of transactions go up, so did the volume of premiums for lift-outs and plan terminations, a phenomenon they attribute to several large market transactions. And they say that half of the transactions in the first half of 2023 were plan terminations.
Longer-Term Trend
This is part of a longer trend, LIMRA suggests. They reported that PRTs in the first quarter of 2023 were the highest for any first quarter it measured, as well. They say that U.S. single premium PRT sales came to $6.3 billion.
Milliman goes further. They reported that PRT market activity “broke records” in 2022, based on single-premium transactions amounting to $51.9 billion, $12.2 billion more than in 2021.
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