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International Paper has purchased a $1.6 billion group annuity contract from the Prudential Insurance Company of America, which will shift the benefit obligations of 23,000 retirees to the insurer.
The deal is not only the second pension risk transfer between the two in nearly a year, but the second-largest agreement in 2018, behind FedEx’s mammoth $6 billion pact with MetLife in May.
International Paper’s previous $1.3 billion buyout with Prudential was last October, where the insurer took on the benefits of 45,000 International Paper beneficiaries. It was the first pension risk transfer between the two organizations.
Group annuity buyouts have become increasingly more popular across the corporate pension landscape as chief investment officers seek ways to de-risk their plans and boost funding ratios. A risk transfer helps shield the fund from volatility and lengthier payments as life expectancy grows.
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