MetLife to provide pension benefits to 41,000 FedEx retirees through annuity
U.S. insurer MetLife Inc
MetLife and FedEx expect to close the deal, which includes about $6 billion in pension obligations, on May 10, they said.
The deal is the first "jumbo-sized" U.S. transfer of pension obligations to an insurer, measured by premium, since 2013, wrote Wells Fargo Securities LLC analyst Sean Dargan in a research note late on Tuesday.
It also marks MetLife`s entry into the market for jumbo-sized transfers, Dargan wrote. The insurer has historically competed for pension transfer deals with less than $1 million in premiums, Dargan wrote.
Some life insurers, including Prudential Financial Inc
These deals, known as pension risk transfers, have been around for at least 90 years, but rising interest rates and stock market values are expected to make it easier for more companies unload their plans to insurers.
In 2017, MetLife disclosed that it had failed to make payments to pensioners whom it could not locate after taking over their plans from private companies. MetLife since been trying to locate the individuals, whom it intends to pay, the company has said.
The deal "is a vote of confidence after MET`s group annuitant issues and charges of the recent past," Dargan wrote.
FedEx`s purchase of the group annuity contract will be funded by assets of its pension plan, the company said.
The amount of monthly payments to the pensioners will not change, the companies said.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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