Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

MetLife’s Wheeler Says GM Pension Transfer a Catalyst

Don't Miss Out —
Follow us on:
MetLife’s Wheeler Says GM Pension Transfer a Catalyst for Market
A worker walks by a Ford Mustang awaiting a final check at the Ford Motor Company Dearborn Assembly Plant in Michigan. Photographer: Daniel Lippitt/ Bloomberg

Aug. 2 (Bloomberg) -- MetLife Inc., the largest U.S. life insurer, said the deal reached by No. 2 Prudential Financial Inc. to assume pension liabilities from General Motors Co. may spark more transfers of risk to financial firms.

“It’s fair to view that as a bit of a catalyst,” said William Wheeler, president of the Americas at New York-based MetLife, in a conference call today. “That’s causing other corporate treasurers of large traditional companies with old traditional pension plans to think hard about what they should be doing. Certainly there’s more conversation now than there was pre-GM.”

GM, the largest U.S. automaker, said in June it would cut its pension obligation by $26 billion by offering payments to about 42,000 retirees and shifting plans to Prudential for workers who don’t take lump-sum awards. Detroit-based GM agreed to contribute $3.5 billion to $4.5 billion in cash to the salaried pension plan to help fund it and purchase the annuities from Prudential, the automaker has said.

Low interest rates may pressure employers to seek to transfer their obligations, because it is harder for companies to generate returns on funds set aside for pension liabilities, Wheeler said. Insurers are well equipped to take on the contracts because they are used to managing large pools of assets and have experience dealing with risk tied to life expectancies, Newark, New Jersey-based Prudential has said.

“I do think you’ll see more deals, more big deals,” Wheeler said, adding that low interest rates also pressure insurers and could limit the number of transactions. “We will not do a big closeout just so we can print a big deal.”

To contact the reporter on this story: Steven Norton in New York at Snorton7@bloomberg.net

To contact the editors responsible for this story: Dan Kraut at dkraut2@bloomberg.net; Jamie Butters at jbutters@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.