Pension obligations of $2.8bn transferred to Athene
Athene Holding Ltd has closed a significant pension risk transfer transaction in connection with American department store chain JCPenney's pension plan termination.
Under the terms of the transaction, the Bermudian-based financial services company said JCPenney transferred $2.8 billion in pension obligations to Athene.
Athene's wholly-owned subsidiaries, Athene Annuity and Life Company and Athene Annuity & Life Assurance Company of New York, have agreed to provide annuity benefits for approximately 30,000 participants of JCPenney's pension plan who are currently receiving benefits, or will receive benefits in the future, it said.
JCPenney filed for bankruptcy last May, the Covid-19 pandemic having adversely impacted the 118-year-old retailer.
The company exited bankruptcy late last year with its purchase for $1.75 billion by Simon Property Group and Brookfield Asset Management, the largest mall owners in the United States.
Sean Brennan, EVP of pension risk transfer and flow reinsurance at Athene, said: "We are pleased to serve as a trusted partner to JCPenney in providing retirement security to its retirees and their beneficiaries. By choosing Athene, JCPenney is entrusting its pension promises to a company with deep experience and expertise in the long-term management of retirement benefits.
“Rather than face benefit reductions amid the company's restructuring activity, the retirees covered by this transaction can be confident they will receive the same pension benefit, on the same schedule, as what they currently receive, or expected to receive in the future."
Steve Whaley, chair of the benefit plan investment committee of J C Penney Corporation Inc, said: "We wanted to find a better solution for our pension plan participants than the distress termination. With the assistance of multiple pension termination experts, we reached an agreement with Athene Holding Ltd to purchase annuities for all pension plan participants in conjunction with the plan termination."
Bill Wheeler, president of Athene, said: "Pension risk transfer is an attractive solution for plan sponsors interested in a plan termination, including those going through a company restructuring. Athene is well-positioned to provide plan sponsors with customised solutions that achieve their desired objectives while ensuring the financial security of their plan participants.
"Our ability to structure innovative solutions combined with our differentiated investment, actuarial, risk management, operational capabilities, and strong balance sheet leaves Athene uniquely positioned to serve the multi-trillion-dollar defined benefit marketplace."
Under the agreement, AAIA and AANY have each committed to issuing a group annuity contract to JCPenney and individual annuity certificates to applicable participants.
Athene said it utilised its strategic capital vehicle, Athene Reinsurance Co-investment to support the completion of this transaction.
Separately, Athene and global investment manager Apollo last month announced that they have entered into a definitive agreement to merge in an all-stock transaction that implies a total equity value of approximately $11 billion for Athene.
Athene, through its subsidiaries, had total assets of $202.8 billion as of December 31, and operations in Bermuda, the United States, and Canada.
Apollo had assets under management of approximately $455 billion as of December 31, in credit, private equity, and real assets funds.
The transaction is expected to close in January of 2022.