New BCG Paper Highlights Currently Exceptional Pension Risk Transfer Annuity Placement Pricing – Will It Last?
Three Factors Are Currently Contributing to Exceptional Annuity Pricing
BRAINTREE, MA, June 2, 2021 – BCG Pension Risk Consultants | BCG Penbridge (“BCG”), a leader in defined benefit risk mitigation services for nearly 40 years, and year after year one of the most active annuity placement specialists in the United States serving defined benefit plan sponsors, today announced its release of a new BCG paper highlighting the pension risk transfer (PRT) annuity placement market, in particular the exceptional pricing that BCG has observed on its 2020 and year-to-date 2021 annuity placement transactions.
According to BCG’s new paper, there are three factors currently contributing to exceptional annuity pricing:
- Ten insurers having entered the PRT market since 2014, bringing the number of insurance companies active in the PRT market to 18, which has resulted in more competition to win deals regardless of the size of the deal;
- PRT insurers continue to refine their mortality assumptions and evaluate factors that drive mortality as their respective PRT blocks of business have grown, leading to a more accurate assessment of mortality risk and better pricing; and
- Both new entrants and long-standing PRT insurers are increasingly making use of differentiated investment strategies for their portfolios backing these liabilities, and also using reinsurance as a means to improve pricing
The paper was authored by Steve Keating, Managing Director at BCG, who concluded the paper with a list of plan sponsor action items:
- Engage an unbiased and experienced pension risk advisor to support strategy setting and formulation of pension de-risking objectives;
- Ask annuity placement specialist candidates about their PRT market innovation achievements;
- Prioritize cleaning of plan data, including thorough death audits and address searches, and finalizing all accrued benefits;
- Gather all the information needed to assess pension risk transfer, including beneficiary information and nine-digit zip codes when possible; and
- Take advantage of currently exceptional annuity pricing while it lasts
The paper was also featured in the May publication of the BCG Pension Insider Newsletter, a monthly publication that BCG distributes to plan sponsors, plan advisors, asset managers, insurers, reinsurers as well as other industry participants. To subscribe to the newsletter, click here.
About BCG Pension Risk Consultants | BCG Penbridge
BCG specializes in assisting defined benefit plan sponsors with managing the costs and risks associated with their pension plans. Since 1983, BCG has successfully helped over 2,000 organizations achieve their pension de-risking goals. Our clients range from publicly-traded companies, to privately held firms, and include healthcare, banks and not-for-profit organizations. BCG helps clients with the full range of pension de-risking strategies from liability driven investing approaches to partial or full pension risk transfer, including navigating the complex and lengthy process of plan termination. BCG frequently works in collaboration with financial advisors, consulting actuaries, institutional investment consultants, asset managers and law firms. BCG is headquartered in Braintree, MA with satellite offices across the US. Please visit our website at: www.bcgpension.com.
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