Voya Financial Lands Pension Risk Transfer Deal Worth $350 Million
February 26, 2016 by Dennis Gorski, managing editor-online, BestWeek: Dennis.Gorski@ambest.com
WINDSOR, Conn. – Voya Financial’s retirement unit has entered into a pension risk transfer arrangement covering several thousand retirees of a Philadelphia-based specialized chemical company.
Chemtura Corp. said in a statement it has agreed to buy a group annuity contract from Voya Retirement Insurance and Annuity Co. that will begin paying pension benefits to its retirees on May 1. The transaction enables Chemtura to better manage its pension obligations by shifting the responsibility for these payments over to Voya, the statement said.
Voya said the value of the annuity was about $350 million in premiums. Covered individuals “will experience no other changes except that the payments will come from Voya instead of Chemtura,” Voya said.
Chemtura said the transfer affected about 5,000 retirees in the United States who were receiving monthly pension payments as of Sept. 1, 2015 and whose pension benefits were less than $2,000 per month.
The annuity purchase price will be funded directly by the assets of its retirement plan, Chemtura said. It plans to make a cash contribution to the plan in the first quarter of 2016 of between $30 million and $40 million in order to maintain the plan’s funded status. Chemtura said it expects to incur a noncash pension settlement charge of $150 million to $170 million before tax during the first quarter of 2016 in connection with the group annuity purchase.
“Many employers with traditional defined benefit plans are looking to reduce the uncertainty associated with managing these programs,” according to Rick Mason, president of Small/Mid Corporate and Institutional Investment Markets at Voya Financial. The company is currently focused on pension risk transfer opportunities to help small and midsize employers and their workforces, according to the release.
The operating members of Voya Financial have a current Best’s Financial Strength Rating of A (Excellent).
In afternoon trading Feb. 24, shares of Voya (NYSE:VOYA) were $28.63, up 0.10% from their previous close.