Morneau Shepell has announced that it advised Navistar Canada ULC in the execution of a $333 million annuity buy-out deal covering more than 1,700 retirees. RBC Insurance and iA Financial Group were awarded portions of the group annuity buy-out, says a Feb. 27 statement.
The appointment of these insurers “followed a thorough selection and due diligence process,” said Morneau Shepell. “The payment of the retirees’ monthly pension will now be the responsibility of these insurance companies.”
An increasing trend
Morneau Shepell notes that this deal follows an increasing trend of defined benefit plan sponsors transferring their pension risk to a third party.
“As defined benefit plans gain in size and maturity, many companies face the challenge of increased volatility both on contribution requirements and on their balance sheets,” said Benoît Labrosse, vice president, Morneau Shepell Asset & Risk Management. “Plan sponsors are increasingly looking for pension de-risking strategies to enable them to focus on their core business. In this context, bulk annuity transactions for retirees can be a great option.”
Read more on the pension derisking trend in a special report published in the January/February edition of Insurance Journal.