July 26, 2018 / 3:51 PM / 5 months ago

Prudential Financial to take over $923 million in Raytheon pension benefits

(Reuters) - U.S. insurer Prudential Financial Inc (PRU.N) will take over $923 million in pension obligations from Tomahawk missile maker Raytheon Co (RTN.N) in a deal that will cover about 13,000 U.S. Raytheon retirees, the companies said on Thursday.

Prudential has entered an agreement to pay pension benefits to the Raytheon retirees and their beneficiaries through an annuity, the companies said.

The deal, known as a pension risk transfer, is the most recent example of a growing trend among U.S. companies buying group annuities from insurers in order to unload their corporate pension plans.

Prudential Financial Inc, the biggest player in pension transfers, has been in the business since 1928. But rising interest rates and stock market gains are now helping to fuel more deals. That is because companies can more easily meet the requirement of fully funding their plans before selling them.

In May, U.S. insurer MetLife entered into an agreement to provide pension benefits for about 41,000 FedEx Corp (FDX.N) retirees and beneficiaries. The deal included about $6 billion in pension obligations, the companies said.

Reporting by Suzanne Barlyn; Editing by Susan Thomas

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