FirstEnergy Corp., one of the nation’s largest investor-owned energy utilities, in December 2023 completed a $700 million pension risk transfer transaction with Legal & General Retirement America and Reinsurance Group of America Inc., the insurers announced Thursday.
The retiree lift-out covers about 2,200 retirees—representing about 8% of the total pension liability associated with its former power generation subsidiaries, according to a press release.
LGRA, a division of Banner Life Insurance Co., is the lead administrator and will be fully responsible for the service to and administration of all participant accounts transferred as part of the PRT deal. Aon and K&L Gates also advised FirstEnergy on the transaction.
“Partnering with RGA enables us to deliver a unique risk-management solution to FirstEnergy and its annuitants that is backed by the financial strength and experience of two leading insurance companies,” said George Palms, president of LGRA, in a statement. “We take great pride in our level of dedicated customer service and through this transition, and we look forward to servicing and protecting the retirement income for these participants.”
According to FirstEnergy, impacted retirees were notified of the change in January and will be contacted by Banner Life this month. Banner Life began as the administrator of the benefits and the primary point of contact for annuity payment questions on March 5.
FirstEnergy stated that the value of a retiree’s pension benefit will not be affected by the transaction, and monthly payments will continue automatically and uninterrupted based on the current direct deposit or paper check payment method.
LGRA and RGA also conducted a $309 million PRT with PPG Industries Inc. in June 2023, which covered more than 4,000 retirees at the Pittsburgh-based Fortune 500 company.
Verizon Communications Inc. this month completed a $5.9 billion pension risk transfer by purchasing single-premium group annuity contracts with two insurers covering 56,000 retirees. The group annuities were provided by Prudential Insurance Co. of America and RGA.
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Tags: annuity contracts, Banner Life Insurance Co., FirstEnergy Corp., Group Annuity, Legal & General Retirement America, pension risk tranfer, RGA Reinsurance Co., State Street Global Advisors, Verizon