A strong annuity purchase marketplace
The pension risk transfer (PRT) market is continuing to see strong growth, bolstered by heightened interest from plan sponsors due to improved equity market conditions.
An upward trajectory
- 2023 saw a total transaction volume of just over $45 billion. Despite lagging behind 2022, the market remained robust, achieving the highest number of transactions to date.
- 2024 is poised to surpass 2023, with PRT sales in the first half of the year already 15% higher than H1 2023.
- The market continues to evolve, with one new player entering the space.
- This growth trajectory is expected to persist throughout 2024, signaling continued strength in the PRT market.
“Increasingly, plan sponsors are looking to completely offload their pension obligations rather than conducting lift-outs of certain subsets.”
Caitlynn Greenfield | Director, Insurance Consulting & Technology
Helping clients navigate the market
WTW’s experts support decision making and business objectives in several ways:
Market entry support
- Insights into the market, including market landscape, pricing process details and pricing considerations
- Assumption and methodology benchmarking and guidance based on WTW’s 2024 PRT Pricing Survey, covering 96.5% of the 2023 market
- Provision of a sample case to price (based on a previously closed deal) and feedback on competitiveness
Transaction support
- Production of all liability and reserve cash flows for initial and any subsequent bids
- Development of applicable mortality assumptions used to value the targeted qualified pension plan
- Support and guidance related to developing an appropriate pricing methodology, including pricing metrics, identification of key risks, development of associated sensitivities, and determination of applicable reserve and capital levels
Deferred life expertise
- Guidance built on decades of defined benefit plan expertise, to help clients understand specific pension plan designs and considerations when setting deferred life assumptions
A unique combination: Insurance pricing and retirement expertise
WTW serves as the global retirement actuary to more employers in the Global Pensions and Investments 300 than any other company.
Over the past several years, we have served as the largest placement advisor in the U.S. pension annuity placement market.
Leveraging our multiple PRT pricing assumption survey results, we assessed the pricing methodology and assumptions of several new entrants to the U.S. PRT market relative to industry practices.
For several current large players in the U.S. PRT market, we provide ongoing bid support on PRT cases, including developing plan cash flows and setting a customized mortality assumption, leveraging off of our work on the WTW Pension Mortality Analysis.
We have undertaken multiple projects involving pricing and product development for fixed annuities, including immediate annuities. As part of these projects, we have developed access to information and views on key pricing drivers and approaches to asset liability management.
For several potential new entrants to the U.S. longevity market, we provided a PRT market overview and outlined key considerations for them to participate in the market, including sample quote analysis.
For a current player looking to increase competitiveness on larger cases, we provided guidance on setting mortality assumptions for several cases.
For a new entrant to the PRT market, we undertook a validation of its benefit projection and pricing model.
