PRU - Metallus to Purchase Group Annuity Contract for Pension Benefits | Benzinga
CANTON, Ohio, May 20, 2024 /PRNewswire/ -- Metallus Inc. (NYSE:MTUS), a leader in high-quality specialty metals, manufactured components and supply chain solutions, on May 15, 2024, entered into an agreement to purchase a group annuity contract from The Prudential Insurance Company of America ("Prudential") in connection with the termination of the TimkenSteel Corporation Retirement Plan (the "Salaried Pension Plan"). The Salaried Pension Plan termination settles approximately $121 million of the company's remaining U.S. pension obligations.
Prudential will pay future benefits under the group annuity contract starting August 1, 2024, for the remaining approximately 1,000 participants in the Salaried Pension Plan. Prudential is a highly rated insurance company and was selected by the Salaried Pension Plan's fiduciary, with the advice of an independent expert.
"Prudential was carefully selected as a highly rated and experienced retirement benefits provider," said Kris Westbrooks, Metallus' executive vice president and chief financial officer. "Following the Bargaining Pension Plan partial annuitization in 2022, the termination of the Salaried Pension Plan is another significant step towards strengthening our balance sheet and de-risking our legacy pension plans."
Benefits payable to Salaried Pension Plan participants will not be reduced as a result of this transaction. The group annuity contract is an irrevocable commitment by Prudential to make annuity payments to participants covered under the contract. All Salaried Pension Plan participants have been notified of the termination of the Salaried Pension Plan and those with remaining benefit entitlements will receive additional information in the future regarding the group annuity contract, including customer service details to address any questions they may have.
The group annuity contract will be purchased using existing assets of the Salaried Pension Plan and requires no cash contribution from the company. The termination of the Salaried Pension Plan is expected to reduce Metallus' U.S. pension obligation by approximately $124 million, or 20% percent. The company expects to realize a non-cash pension settlement gain of approximately $3 million in the second quarter.
The Salaried Pension Plan's fiduciaries, with the assistance of an independent expert, conducted an objective and thorough analysis of Prudential to ensure it met all regulatory guidelines, has the sufficient capacity, creditworthiness, and administrative claims-paying capabilities to meet its obligations under the group annuity contract, and that the purchase of the group annuity contract was otherwise in accordance with applicable law and U.S. Department of Labor guidelines.
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