Companies are breaking new ground by using captive insurance units to fund pension benefits. Towers Watson, a human resources consulting company, says it has advised on more than $1 billion in insurance transactions to put such arrangements in place.
"What this does is bring into harmony the rights of participants and the rights of shareholders," says Mitch Cole, a director at Towers Watson. "Shareholders want to make sure that everything that gets promised gets paid, but they want to make sure that it gets paid in the most efficient way possible."
A company that sponsors a pension plan arranges to buy from an insurer a group annuity that will pay future benefits for plan participants, Cole explains, and the insurer then reinsures the annuity with the company's captive.
Continue Reading for Free
Register and gain access to:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world cas studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
*May exclude premium content
Already have an account?
Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
