Deals & People July 20, 2012

United Benefit Advisors Names CEO

Thomas Mangan was appointed chief executive of United Benefit Advisors (UBA), an independent employee benefits advisory organization.  
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Mangan has worked in employee benefits for 20 years. His experience spans corporate leadership, sales, services and operations.

Before joining UBA, Mangan served as the EB president of the New England Region of USI Insurance Services; president of the employee benefits division of HUB International; and president of Willis Life of Texas, where he also was South Central Employee Benefits Practice Leader.

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Mangan previously was board member on the Council of Insurance Agents and Brokers, as well as chairman of its Industry Affairs Committee. In addition, he has served on the National Broker Advisory Councils of Aetna, Cigna and United Healthcare.

Mangan holds a bachelor’s degree in business administration from Westminster College and his master’s in business administration from Troy State University. He also is a graduate of the Insurance Executive Leadership Program at the University of Pennsylvania’s Wharton School of Business, and he has earned the designation of Certified Managed Care Executive (CMCE) from Northwestern University.

“We are excited about Thom joining us and believe he brings a bold vision and considerable experience to our organization that will ultimately add tremendous value for all employers working with UBA member firms,” said Jordan Shields, president of The SSM Group, of Novato, California, and UBA board chair.

His UBA appointment was made effective May 18.  

 

The Markets July 20, 2012

Contributions to be a Material Expense for Many Pensions

A majority of large U.S. corporate pension plans are underfunded, with future contributions a material expense for many over the coming years, according Fitch Ratings.
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Fitch’s review encompassed 230 nonfinancial U.S.-based companies with defined benefit pension plans that have U.S. projected benefits obligations (PBOs) of $100 million or more. Of the 230 companies analyzed, 160 were less than 80% funded and warrant further investigation, based on the 80% ‘at risk’ threshold in the Pension Protection Act (PPA).   

Of the remaining 70 companies, 43 were funded in the 80% to 90% range, while 27 companies were funded above the 90% level. The capital goods, consumer and retailing sectors stood out with median plan funding levels of less than 70%.   

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Fitch believes the contribution amounts are material for many issuers. In Fitch’s sample, 34% of the 230 companies have an estimated pension outflow as a percentage of pre-contribution funds from operations (FFO), or cash flow from operations less working capital, above a 10% threshold.  

Another five companies had negative FFO before pension contributions. Fitch estimates that the potential funding requirements of nine companies could amount to 40% or more of their 2011 pre-contribution FFO.   

Relief provided for under the “Moving Ahead for Progress in the 21st Century Act” (MAP-21) signed in July may allow plan sponsors to lower near-term pension contributions. The act provides for a materially higher discount rate for funding purposes, thus lower the present value of liabilities. In Fitch’s opinion, cash flow constrained issuers may benefit from the near-term relief, but for the majority of plan sponsors a more prudent approach will call for funding above minimum levels (see “DB Sponsors Have Incentive to Keep Plans Well Funded”).   

The full report “U.S. Corporate Pensions 2012 Overview” is available here.  

 

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