TimkenSteel to Purchase Group Annuity Contract for Retiree Pension Benefits
On July 7, 2022, TimkenSteel (NYSE: TMST) announced its agreement to purchase a group annuity contract from Prudential for around $250 million, aimed at settling a portion of its $800 million pension obligations. This will secure benefits for approximately 1,900 retirees starting October 1, 2022, with no reduction in their payments. The transaction is expected to reduce TimkenSteel's pension obligations by 25%, resulting in a projected non-cash pension settlement gain of $2 million in Q3 2022, strengthening the company's balance sheet.
- Reduces pension obligations by approximately $250 million, or 25%.
- Expected non-cash pension settlement gain of $2 million in Q3 2022.
- No reduction in benefits for retirees and beneficiaries.
- None.
CANTON, Ohio, July 13, 2022 /PRNewswire/ -- TimkenSteel (NYSE: TMST), a leader in high-quality specialty steel, manufactured components, and supply chain solutions, on July 7, 2022, entered into an agreement to purchase a group annuity contract from The Prudential Insurance Company of America ("Prudential") to settle approximately
In connection with the agreement, Prudential will pay future benefits under the group annuity contract starting October 1, 2022, for a specified group of approximately 1,900 retirees and beneficiaries who are currently receiving payments from the Pension Plan. Prudential is a highly rated insurance company and was selected by the 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 Kristopher R. Westbrooks, TimkenSteel's executive vice president and chief financial officer. "This transaction is a significant step to further strengthen the Company's balance sheet and de-risk our pension plan."
Benefits payable to the retirees and beneficiaries and to other 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 and beneficiaries covered under the contract. TimkenSteel is notifying by mail those individuals who are covered by the forthcoming change and will provide a customer service number to address any questions that covered participants and beneficiaries may have.
The group annuity contract will be purchased using existing assets of the Pension Plan and requires no cash contribution from the company. Once finalized, this annuity purchase is expected to reduce TimkenSteel's U.S. pension obligation by approximately
The Pension Plan's fiduciaries, with the assistance of an independent expert, conducted an objective and thorough analysis of potential insurance companies with sufficient capacity, creditworthiness, and administrative claims-paying capabilities so that the Pension Plan could purchase the group annuity contract in accordance with applicable law and U.S. Department of Labor guidelines. Following this process, the Pension Plan fiduciaries selected Prudential to provide the group annuity contract.
Prudential Financial, Inc. (NYSE: PRU), a global financial services leader and premier active global investment manager with more than
TimkenSteel (NYSE: TMST) manufactures high-performance carbon and alloy steel products from recycled scrap metal in Canton, OH, serving demanding applications in mobile, energy and a variety of industrial end markets. The company is a premier U.S. producer of alloy steel bars (up to 16 inches in diameter), seamless mechanical tubing and manufactured components. In the business of making high-quality steel for more than 100 years, TimkenSteel's proven expertise contributes to the performance of our customers' products. The company employs approximately 1,800 people and had sales of
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Additional risks relating to the company's business, the industries in which the company operates, or the company's common shares may be described from time to time in the company's filings with the SEC. All of these risk factors are difficult to predict, are subject to material uncertainties that may affect actual results and may be beyond the company's control. Readers are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results and that the above list should not be considered to be a complete list. Except as required by the federal securities laws, the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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SOURCE TimkenSteel Corp.
FAQ
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