Both deal activity and aggregate premium value in the US pension risk transfer (PRT) market declined significantly in the first quarter, by 31% and 47%, respectively.
As a consequence, market participants say that they have seen a greater number of insurers bidding for deals while schemes weigh emerging alternatives to terminations as the traditional de-risking route.
Jake Pringle, Principal and Consulting Actuary at advisory firm Milliman, said the company has seen an average four to eight insurers bidding for each of the deals it has taken to the market in the past year, up from between two and six.
“Even if we don’t feel great about one or two of those [bidders], we now have more options when we’re doing the bidding process,” Pringle said.
While the 20-plus insurers that jostle for PRT business in the US have tended to discriminate in the types of schemes they bid for, the smaller pipeline has seen them cast their nets wider in search of deals.
“Market conditions and transaction volumes can lead insurers to deviate from their traditional ‘sweet spots’,” said Alex Gagnon, Vice President, Head of Distribution at Banner Life family of companies.
“We’ve seen insurers who typically focus on larger cases participate in smaller transactions, and vice versa, as they seek to deploy capital and maintain desired business volumes.”
The drop-off in the US PRT market this year continues a decline in transaction values that was set in place in 2025, when $48.5 billion of buy-in and buy-out transactions were struck, 6% lower than the $51.8bn in 2024 (and the first annual decline since 2020).
While economic conditions remain favourable for schemes to de-risk, especially with interest rates remaining elevated (when compared to the post-GFC decade) and the Fed mulling further increases amid sticky inflation, a combination of new factors appears to be influencing the market.
The most noticeable has been the surge in buy-ins, which have been noticeably fewer in number historically than in the UK market, for example. The record $17.5bn of such deals completed last year represents a 372% increase on those struck in 2024 and a third of all PRT premiums for 2025.
“This was a more specialised solution a few years ago, but now more insurers and intermediaries have the capabilities to support sponsors with this strategy,” said Gagnon.
One of the benefits of a buy-ins is that they can provide insulation from potential litigation.
When winding down a scheme, sponsors must demonstrate that they have made all possible efforts to ensure they have found the “safest annuity available” for scheme members. This fiduciary responsibility, enshrined in the Employee Retirement Income Security Act (ERISA) of 1975, is the requirement that has led to several companies being sued in recent years because the plaintiffs claim this responsibility has not been met.
Such cases can be protracted and costly, which may be driving some trustees to hit the pause button.
“There’s a few [cases] out there with some of these insurance companies now that are catching the eye of plan sponsors, so maybe they’re a little more cautious,” said Pringle.
It’s possible, too, that the declining number of DB schemes still in existence has contributed to the market slowdown. In 1975, a third of all private pensions in the US were run by DB schemes. By 2020 that had dropped to just 7%.
That decline may be having a bearing on the influence that the economics of US pension administration are exerting on the PRT deal pipeline, according to observers.
Sponsors are required to pay a levy on each of their pension beneficiaries into funds created to provide pools of money that will cover the liabilities of failed schemes. Extricating themselves from paying into the Pension Benefit Guaranty Corporation (PBGC) has long been a driver of schemes’ de-risking activities.
However, as scheme funding levels have improved – in August alone, funding ratios climbed to 111.7% from 110.6% – any urgency to enter into a buy-out transaction solely to escape these fees has diminished. Additionally, well-funded sponsors may prefer to manage assets internally to capture any excess investment returns that may be available.
“Their investment manager might be telling them, ‘I can get you an extra 150 basis points return on [your assets], and that’s going to cover more than enough for the PBGC premium,” said Pringle.
“So, they may not want to take these assets out of play by giving them to an insurance company [if they] get better returns and still have excess to be able to cover those premiums as well as anything else.”
Experts are predicting that the importance of buy-ins will continue to increase. Banner Life’s Gagnon, for instance, said he expects transactions to number around 30 this year.
“It’s a shift that feels more structural, not temporary,” he said.
The full-year PRT tally could shift dramatically if larger deals come to market. The so-called “jumbo” transactions – those over $1bn – dominated in the years of bumper deal values but have been few and far between since last year.
However, observers note that the mechanics of the US pensions industry mean some could be waiting in the wings. Most American schemes have a 1st January evaluation date and that usually leads to assessment reports being published late in the third quarter.
While insurer capacity is traditionally highest in the first two quarters, the paucity of transactions early this year suggests they have lots of firepower remaining.
“Just naturally, things tend to pick up in the third and fourth quarter… from what I understand from insurance companies that are receiving our opportunities, things are pretty busy right now,” said Pringle.
“So, I would expect the third and fourth quarter of 2026 is when we get the results in and we get another strong finish to the year.”
