Towers Watson announced Tuesday it has completed more than $1 billion in transactions for the funding of pension benefits through captive insurance companies.
The professional services company stated it expects a growing number of multinationals to express interest in this approach to funding pension benefits, which they developed to help companies better manage the investment and risks of their defined benefit obligations.
Under the approach that Towers Watson created and introduced to the market, a company purchases an insurance policy from a highly rated insurer to meet the benefit obligations of its pension plans. The insurer then reinsures the policy to the company's captive insurer. While some companies have used captives for multinational pooling and funding life, disability and retiree medical benefits, using captives to fund pension benefits is a new development.
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