The TELUS Health Pension risk transfer 2024 Q1 review says during the first quarter of 2024, the Canadian pension risk transfer (PRT) annuity purchase market witnessed a substantial upswing in activity, particularly when compared to first quarter activity in the previous two years. They say approximately $1-billion in liabilities were transacted during the period. In comparison, the average transaction volume from the first quarters of 2020 to 2023 averaged around $300-million.
“While some large transactions initially planned for 2023 were deferred to 2024, the surge in activity in the first quarter of 2024 is mostly due to the higher number of transactions and could be attributed to plan sponsors seizing opportunities to conduct transactions during a traditionally quieter period of the year,” they write. “Insurers’ pipelines have rapidly filled up, and this trend is expected to continue throughout the year, rather than being concentrated in specific periods as was often the case previously.”
They add that certain insurers might reassess their volume objectives for 2024, given that targets could be achieved in the first quarter of the year alone. “Some insurers could become more selective much earlier in the year,” they warn.
Mortality assumptions
The paper goes on to look at new mortality assumptions published by the Canadian Institute of Actuaries: “The paper highlights the significant uncertainty surrounding the long-term mortality improvement rates,” they write. It also looks at the implications three recent lawsuits in the United States might have on the market in Canada. “Understanding the distinctions between the Canadian and U.S. PRT markets is important,” they add, saying that legislation is different, as is the oversight and regulation of pension plans in Canada.
