It's an exciting time in the US pension risk transfer (PRT) sector with rapid market growth, new insurers participating, and plenty of opportunity with over $3trn in defined benefit assets from pension plans that have yet to select de-risking solutions with insurers.

As demand in the US PRT market continues to grow, in 2023, Legal & General Retirement America (LGRA) partnered with Reinsurance Group of America (RGA) to devise a competitive solution aimed at large PRT deals.

LGRA and RGA created a split transaction arrangement, whereby LGRA provides the lead administration services for both insurers, with RGA funding its annuity benefit obligations through bulk payments to LGRA.

Together, LGRA and RGA won multiple retiree-only lift-out transactions in 2023 totalling $1bn with this first-of-its-kind arrangement, increasing market capacity to meet the growing demand from plan sponsors.

Split transactions are not necessarily new to the US PRT market and LGRA and RGA explain that prior instances were generally arranged for a specific transaction between two insurers that had limited time to prepare and coordinate.

"What differentiates this arrangement is that LGRA and RGA leveraged our longstanding relationship and cultural alignment to proactively coordinate all aspects of this arrangement in advance of bringing our joint solution to the US PRT market," according to spokespeople for two providers.

The spokespeople add: "The end customer's retirement experience was always top of mind for our teams as we developed our split transaction solution, and we worked together for over a year to proactively coordinate all aspects of the arrangement in advance of bidding on an opportunity. This included advance coordination of all documents, bid day logistics, and post-sale processes to provide consultants and sponsors with a smooth and efficient transaction."