Benzinga | Dec 14, 2021 04:10PM EST

Alcoa Reports Purchase Of Added Group Annuity Contracts That Will Enhance Co.'s Balance Sheet

Alcoa Corporation (NYSE:AA) today announced the purchase of additional group annuity contracts that will further enhance the Company's strong balance sheet, reduce the risk of volatility in pension plans and secure the Company's commitments to retirees and beneficiaries.

The additional annuity contracts with two subsidiaries of Athene Holding, Ltd. (NYSE:ATH) will facilitate the transfer of approximately $500 million of pension obligations and related assets associated with defined benefit pension plans for certain United States retirees and beneficiaries.

The transfer complements a prior annuitization announced last month for certain U.S. pension plans. That action, which is now complete, included approximately $1 billion of pension obligations and related assets.

As a result of the action announced today, Athene will assume later this month obligations for approximately 2,600 participants. There will be no benefit changes for those covered by the pension plans.

Athene, through its subsidiaries, is a leading retirement services company with total assets of $224.4 billion as of September 30, 2021. With operations in the United States, Bermuda and Canada, Athene specializes in helping its customers achieve financial security and is a solutions provider to institutions. Athene's principal insurance company subsidiaries have an "A" rating from A.M. Best and Fitch Ratings and an "A+" from Standard and Poor's Global Ratings.

Alcoa expects to record in the fourth quarter of 2021 a non-cash settlement charge of approximately $285 million (pre- and after-tax) related to the December action. When combined with the prior annuity purchase announced in November, the total charge in the fourth quarter of 2021 is approximately $850 million (pre- and after-tax), or $4.48 per share.

The Company's remaining U.S. defined benefit pension plans are expected to be greater than 95 percent funded after the transfer is complete.