MetLife and FedEx in pension risk transfer deal covering $6bn of liabilities
Metropolitan Life Insurance Company (MetLife) has entered a risk transfer agreement with FedEx Corporation, which will see it cover approximately $6 billion of FedEx’s pension obligations.
MergerThe deal, which will cover around 41,000 retirees and beneficiaries in the FedEx defined benefit pension plans, is believed to be the largest U.S. pension transaction by premium in the last five years.
Following the transaction, which will be executed by a combination of cash and assets of the Pension Plans, FedEx will purchase a group annuity contract from MetLife, who will assume responsibility for making benefit payments to the retirees covered by the agreement.
MetLife’s 2017 Pension Risk Transfer poll indicated that plan sponsors are increasingly choosing to transfer their pension obligations to insurance companies, with 57% expressing interest in annuity buyouts for their defined benefit pension plans, up from 46% in 2015.
Michel Khalaf, President, U.S. Business and EMEA at MetLife, said: “We are very pleased to have been selected to provide pension benefits for FedEx retirees and beneficiaries.
“By taking on a portion of the payment obligations of the FedEx defined benefit pension plans, we will help FedEx secure its pension obligations and provide its retirees with financial security. This is something MetLife has been doing for nearly 100 years.”
MetLife currently manages pension payments for more than 600,000 annuitants, and its Retirement & Income Solutions business includes U.S. Pensions, Institutional Income Annuities and Structured Settlements, in addition to other institutional retirement product areas.