5 December 2018Analysis

Bristol-Myers Squibb to transfer $3.8bn in pension liabilities to Athene

Bermuda-based pension risk transfer provider Athene has agreed a pension plan termination transaction with US pharmaceutical company Bristol-Myers Squibb.

After a payout of lump sum obligations in July 2019, the annuity contract provided by Athene to Bristol-Myers Squibb is expected to cover as much as $3.8 billion of pension liabilities when the transfer completes in August 2019.

Through Athene's Iowa-based life insurance subsidiary, Athene Annuity and Life (AAIA), the annuity contract will cover all obligations of Bristol-Myers Squibb's US retirement income plan for which the plan participants do not elect to receive a lump sum payment.

Bristol-Myers Squibb covers more than 24,000 active employee  participants, retirees, beneficiaries , and former employees who have not yet commenced their benefits.

“We are pleased to have been selected as a trusted partner by Bristol-Myers Squibb, a global leader in the biopharmaceutical industry, to serve all of their US plan participants through this innovative transaction,” said Sean Brennan, senior vice president and head of pension risk transfer at Athene.

“This transaction represents the largest full-plan termination to date that includes both retirees and non-retirees, and we believe this approach may provide a blueprint for plan sponsors considering full plan terminations in the future.”

After the deal is complete, Athene will provide irrevocable commitments to all Plan participants and will assume full financial responsibility, including required administration, for annuity and lump sum payments. Plan participants have received information packages and do not need to take any action at this time.

“As a leader in pension risk transfers, Athene is able to provide plan sponsors with customised solutions to achieve their desired pension risk and financial objectives while ensuring the financial security of their plan participants,” said Bill Wheeler, president of Athene.

“Our differentiated investment, actuarial, risk-management, and operational capabilities, combined with our strong balance sheet, position us well to serve the $3 trillion defined benefit marketplace.”

Throughout 2018, Athene has closed six pension risk transfer transactions totaling more than $1.8 billion.