MassMutual, AIG Take On Accenture’s $1B Pension Obligations

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By Kristen Ricaurte Knebel

Accenture completed the termination of its pension plan by transferring $1 billion in pension obligations to MassMutual and American General Life Insurance Co., the company announced.

The transaction with MassMutual and the AIG subsidiary was completed in late May and the two companies will assume payment responsibilities in August, Accenture said in a June 23 regulatory filing. In addition to the $1 billion annuity settlement, Accenture paid out about $600 million in lump-sum payments to nearly 7,000 current and former employees. The New York-based professional services company announced its intention to terminate its pension plan in March 2016.

This isn’t the first time MassMutual has teamed up with other insurance companies to facilitate annuity buyouts. In 2016, MassMutual and Metropolitan Life Insurance Co. took on $1.6 billion in pension liabilities from PPG Industries Inc. In 2015, MassMutual and Prudential took on $2.5 billion in pension liabilities from Kimberly-Clark Corp.

Single premium buyout sales in the U.S. totaled $1.415 billion, up 31 percent from $1.084 billion at the same time last year, in the first quarter of 2017, according to the most recent data from LIMRA.

Lion’s Share of Market

It may seem that Prudential and MetLife take up a large share of the pension buyout market, but there are currently 14 insurance companies that facilitate these kinds of transactions, according to LIMRA. Other companies include Mutual of America, Mutual of Omaha, New York Life, Pacific Life, and Transamerica.

“While jumbo contracts (over $1 billion), like ones by Prudential, are more often covered in the news, overall there were 383 contracts sold in 2016. There is great opportunity in this market,” Catherine Theroux, director of public relations at LIMRA, told Bloomberg BNA in an email.

In May, Sears Holdings Corp. entered into an agreement with MetLife to annuitize $515 million of Sears’ pension liability. Prudential’s recent annuity transactions include WestRock Co. ($2.5 billion), United Technologies Corp. ($1.77 billion), and J.C. Penney Co. ($1.5 billion).

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at kknebel@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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