US Single-Premium Buyout Sales Set Record in 2022

2022 was a banner year for risk transfers, setting records in total dollar volume, contracts signed and single-premium buyout deals as rates rose and funding statuses improved.

New data out from LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey showed that single premium buyout sales set a record in the U.S. in 2o22, totaling $48.3 billion in volume during the year, up 42% from 2021. The survey included 20 carriers who represent 100% of the U.S. pension risk transfer market. The annual performance in the deal type was lifted by a remarkable third quarter, which delivered $26.15 billion in single-premium buyout volume.

Q4 2022 was less rosy in terms of deal volume, as it fell to $7.2 billion, down 42% from Q4 2021. But 2022 as a whole set a record for total single-premium buyout contracts, with 562, 34% higher than the total in 2021, and exceeding the previous record of 500, set in 2019.

“Rising interest rates and equity market volatility created an attractive environment for single premium buy-out sales in 2022,” said Mark Paracer, LIMRA’s assistant research director for retirement plans, in a statement. “While there were a couple of jumbo deals ($1 billion+), the record high number of contracts suggests broad interest from plan sponsors of all sizes. The higher interest rates improved plans’ funding status, enabling more employers to mitigate their risk through a pension risk transfer (PRT) solution.”

Conversely, single-premium buy-in sales fell nearly 9% in 2022 from 2021 volumes, totaling only $3.6 billion in deal volume. Despite the drop-off, Q4 2022 proved to be a bright spot: Three total buy-ins totaled $895 million in volume, more than double the volume in the same quarter one year prior.

In 2022 collectively, single-premium buyout and buy-in sales summed $51.9 billion, a record for an annual total in cumulative sales in U.S. risk transfers. At the end of 2022, total group annuity assets totaled $274 billion, an increase of 14% from the end of 2021. The $234 billion in total single premium buyout assets represented 86% of the total PRT market assets.