Philips Electronics group annuity contracts spread over three insurers
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Philips Electronics is buying group annuity contracts from three insurers to shift just over $1 billion in pension benefits promised to about 17,000 U.S. pension plan participants to the insurers.
Philips Electronics, the U.S. subsidiary of Royal Philips, the Dutch technology company, will purchase the annuity contracts from Prudential Insurance Co. of America, Banner Life Insurance Co. and American United Life Insurance Co.
“This transaction is in line with Philips’ objective to mitigate the company’s financial exposure to its defined benefit pension plans,” Royal Phillips said in a statement Thursday.
Under the arrangement, benefits promised to current retirees are being split between Prudential and Banner Life, with each insurer providing 50% of the monthly benefits. American United will provide benefits to former Phillips Electronics employees when they are eligible to receive them.
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