The Markets October 18, 2013

Pension Risk Transfer Attractiveness Increases

The Dietrich Pension Risk Transfer (PRT) Index increased during September, growing from 94.77 to settle at 96.19 as of October 1, 2013.
Reported by

Improving pension funding levels and expanding spreads of corporate bonds against Treasuries drove the 1.42 point gain. The index’s current annuity discount rate proxy of 3.21% dropped 2 basis points in the same time period.

Geoff Dietrich, vice president of Dietrich & Associates, said long-term interest rates have slipped some since the Federal Reserve readjusted the outlook for its quantitative easing policy, but the cost to insure pension obligations through annuitization has not suffered as a result.  

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“This shows us that interest rates are not the sole factor driving the price of PRT,” Dietrich said.  “This market is dynamic.  There are too many factors involved and the Index is proof of that.”

Dietrich said dismissing PRT due to interest rates alone is “not sound decisionmaking.”

The Dietrich Pension Risk Transfer Index provides a dynamically constructed, monthly directional data-point regarding the market conditions that affect PRT settlement costs. Higher index values indicate a reduction in the settlement cost environment. The index was designed to provide pension stakeholders a thoughtful mechanism for monitoring settlement market conditions and to support effective plan governance and decisionmaking.

The Dietrich Pension Risk Transfer Index can be found here.

Deals & People October 18, 2013

MassMutual Opens Phoenix Branch

Massachusetts Mutual Life Insurance Company (MassMutual) opened a branch in Phoenix, Arizona, establishing the company’s first corporate office in the western United States.
Reported by

 

MassMutual plans to hire about 400 people at the Phoenix location by the end of next year. A variety of professional financial services roles will be offered in the areas of customer service, sales, operations, underwriting, claims and technology.

Michael Fanning, executive vice president and head of the firm’s U.S. insurance business, said the new location will enable MassMutual to better serve all of its U.S. policyholders while further mitigating operational risks.

Elaine Sarsynski, executive vice president and head of the company’s retirement services business, said MassMutual will have the advantage of building on an existing Phoenix-based employee retirement plan team recently acquired from The Hartford. 

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In addition to the new corporate presence, MassMutual has worked in the greater Phoenix area since 1953 through its Scottsdale-based field office, MassMutual Arizona.

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