The Challenge of Transferring Pension Risk

General Motors’ Alfred Kibe talks about the company’s groundbreaking transaction with Prudential.

Alfred Kibe, director of capital planning and pensions funding in the treasury Department of General Motors, says he is driven by the idea of challenge. It certainly had to be challenging for this Kenyan native, who earned a degree in electrical engineering at the University of Nairobi, to switch specialties and cross the globe to go for an M.B.A. in finance at the University of Pennsylvania’s Wharton School of Business. Kibe says General Motors gave him even more opportunities to challenge himself as the company’s program of rotating people in and out of positions had him managing bank relations, business development, auto finance and most recently capital planning and pension funding.

It was this latest assignment, Kibe says, that has been his greatest challenge. He recently led the negotiations to transfer some $26 billion in GM pension obligations to salaried employees into a lump sum and annuitization transaction with Prudential Insurance. The deal, completed on Nov. 1, is the largest such pension risk transfer on record and represents a huge reduction in pension liability risk for the world’s biggest automaker.

Before your current assignment, you ran consumer financing. Did that experience help you with your current challenge?
Sure. In my prior assignment, we worked to put in place agreements with banks in North America during the fiscal crisis that would service our prime customers. Then in 2010, with the acquisition of AmeriCredit, now known as GM Financial, a captive finance unit, we were able to handle our subprime and leasing customers. What I learned in that work is that if you have the right team of people, you can solve your problems. In the case of the pension risk, we started out with a goal of transferring the risk. We weren’t sure there was a way to get it done, but working together with people at Prudential, we were able to put together a structure that worked for both sides.

What has been the key to your rapid career climb since graduating from the University of Nairobi in 1998?
The biggest thing is building relationships. I haven’t had a formal mentor, but throughout my career, I’ve cultivated relationships at all levels—both with senior people and with peers—and over time, those relationships have helped me build my career.

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