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Corporate
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Pension Risk Transfer (PRT) Markets Close Another High Growth Year in the US and UK
20 Dec 2023
Legal & General Retirement America (LGRA), a leading provider of pension risk solutions in the United States, announced today that it has reached the milestone of $10 billion in total written premium and over 100 deals since its 2015 inception, with roughly $5 billion secured in just the past three years.
Year-to-date, LGRA has completed $1.7 billion in transactions securing the retirement for over 27,000 annuitants. LGRA’s new business volume was primarily driven by a nearly $0.8 billion transaction – the provider’s largest deal to date.
Legal & General (L&G) has written $7.5bn of PRT in the US and Canada from 2020 through 2023. There remains significant opportunity in these markets, and L&G is well-positioned to continue to execute where commercial conditions support.
Plan sponsors globally have increasingly sought de-risking solutions to secure retirement benefits amid market volatility. In the US, total PRT market volume is expected to reach an estimated $46 billion in 2023, the second largest year on record1.
Activity in the UK PRT market also remains strong, with total PRT volumes expected to reach around £50bn for 20232. Recently, L&G’s UK PRT division announced its £4.8 billion full buy-in with the Boots Pension Scheme. The buy-in secured the benefits of all 53,000 annuitants of the Scheme, making it the UK’s largest single transaction of its kind by premium size and, for L&G, the largest single transaction by number of members.
These successes have contributed to L&G posting a record year with £13.6 billion of global PRT written to date.
George Palms, President, Legal & General Retirement America: “In a short amount of time, LGRA has exhibited tremendous growth to become one of the United States’ top PRT providers, having four repeat clients this year alone. We continue to see high demand in the growing US PRT market as companies look to work with a trusted partner to effectively manage their pension obligations while also providing a secure retirement for their employees. We’re honored to fill that role and work with our clients to ensure the financial security of more than 160,000 annuitants in total.”
Andrew Kail, Chief Executive Officer, Legal & General Retirement Institutional: “We are excited to have reached the $10 billion milestone in the US, underscoring the strength of our global PRT business. Our growing success in North America – including a recent CAD$350 million transaction in Canada - is a strong indication that we can build competitive propositions for clients across markets and contexts.This has been a record-breaking year for Legal & General with £13.6 billion in global PRT written to date, building on the achievements of prior years. Since the beginning of 2018, we have written a total of £59.7 billion of global PRT. We again experienced zero credit defaults in 2023, as was the case from 2010 to 2022. We look forward to continuing to support pension schemes worldwide, securing and protecting member’s benefits.”
References
12023 figure based on Legal & General Retirement America’s estimation
2Advisors suggest annual UK PRT volumes alone could exceed £50 billion for at least the next five years (Lane, Clark & Peacock)
Established in 1836, Legal & General is one of the UK’s leading financial services groups and a major global investor, with £1.2 trillion in total assets under management (as at FY23) of which c40% (circa £0.5 trillion) is international.
We have a highly synergistic business model, which continues to drive strong returns. We are a leading international player in Institutional Retirement, in Retail Savings and Protection, and in both public and private markets through our Asset Management division. Across the Group, we are committed to responsible investing and dedicated to serving the long-term savings and investment needs of customers and society.
As at 7 June 2024, we estimate the Group’s Solvency II coverage ratio to be 224%.
As at 11 June 2024, Legal & General has a market capitalisation of £14.6 billion.
Legal & General Retirement America (LGRA) specializes in customized pension risk solutions for institutional clients in the US market. Established in 2015, Legal & General Retirement America is a business unit of Legal & General America, Urbana, MD. Legal & General America life insurance and retirement products are underwritten and issued by Banner Life Insurance Company, Urbana, MD and William Penn Life Insurance Company of New York, Valley Stream, NY. Banner products are distributed in 49 states, the District of Columbia and Puerto Rico. William Penn products are distributed exclusively in New York; Banner does not solicit business there. The Legal & General America companies are part of the worldwide Legal & General Group.
Institutional Retirement works with trustees and sponsoring companies of defined benefit (DB) pension schemes of all sizes to settle their pension obligations and secure scheme members’ benefits, through a full range of buy-ins, buyouts and other de-risking solutions. Our Client Services’ 12-month rolling Net Promoter Score (NPS) is above +70, which is widely regarded as being at a “world class” level. Legal & General is the UK’s longest-standing active bulk annuity provider.
Our UK Retirement annuity book stands at an estimated £86.1 billion at 31 December 2023. Across the group over £30 billion is invested in direct investments that deliver positive social and environmental impacts, such as clean energy and affordable housing. Legal & General provides income and pension security to more than a million retirement customers around the world.