FedEx to Purchase $6 Billion Group Annuity Contract from Metropolitan Life Insurance Company to Reduce Pension Obligations
May 08 2018 - 04:30PM
Business Wire
FedEx Corp. (NYSE: FDX) announced today it has entered into an
agreement with Metropolitan Life Insurance Company (“Metropolitan
Life”) to purchase a group annuity contract and transfer
approximately $6 billion of the company’s U.S. pension plan
obligations.
The transaction will transfer responsibility for pension
benefits to Metropolitan Life for approximately 41,000 FedEx
retirees and beneficiaries who satisfy certain conditions and
currently receive a monthly benefit from participating FedEx
tax-qualified U.S. domestic pension plans (the “Pension Plans”).
There will be no change to the pension benefits for any plan
participants as a result of the transaction. Details will be
provided to retired participants and beneficiaries whose continuing
payments will be fulfilled by Metropolitan Life. The transaction,
which is subject to certain closing conditions, is expected to
close on May 10, 2018.
“FedEx is committed to maintaining financially secure pension
benefits for our retirees and their beneficiaries,” said Alan B.
Graf, Jr., executive vice president and CFO, FedEx Corp. “This
transaction better positions FedEx to manage future pension plan
costs, and retirees will receive the same pension benefit from a
highly rated insurance company. Transferred pension benefits will
be protected by the State Guaranty Association in the state where
the retirees live.”
By transferring these obligations to Metropolitan Life, FedEx
will reduce its U.S. pension plan liabilities by approximately $6
billion. The purchase of the group annuity contract will be funded
directly by assets of the Pension Plans. Following the annuity
purchase and transfer, the Pension Plans will remain well
funded.
As a result of the transaction, FedEx expects to recognize a
one-time non-cash pension settlement charge, which will be included
in the fiscal 2018 year-end mark-to-market pension accounting
adjustments that will be reported in the company’s fiscal 2018
fourth quarter earnings release.
During the 2017 and 2018 fiscal years, FedEx made voluntary
contributions of $4.5 billion to the Pension Plans, including the
most recent contribution of $1.5 billion following the U.S. Tax
Cuts and Jobs Act, which was enacted in December 2017.
About FedEx Corp.
FedEx Corp. (NYSE: FDX) provides customers and businesses
worldwide with a broad portfolio of transportation, e-commerce and
business services. With annual revenues of $64 billion, the company
offers integrated business applications through operating companies
competing collectively and managed collaboratively, under the
respected FedEx brand. Consistently ranked among the world's most
admired and trusted employers, FedEx inspires its more than 425,000
team members to remain "absolutely, positively" focused on safety,
the highest ethical and professional standards and the needs of
their customers and communities. To learn more about how FedEx
connects people and possibilities around the world, please visit
about.fedex.com.
About MetLife
MetLife, Inc. (NYSE: MET), through its subsidiaries and
affiliates (“MetLife”), is one of the world's leading financial
services companies, providing insurance, annuities, employee
benefits and asset management to help its individual and
institutional customers navigate their changing world. Founded in
1868, MetLife has operations in more than 40 countries and holds
leading market positions in the United States, Japan, Latin
America, Asia, Europe and the Middle East. For more information,
visit www.metlife.com.
Forward-Looking Statements
Certain statements in this press release may be considered
forward-looking statements, such as statements regarding
management’s views with respect to future events relating to and
the financial impact of FedEx’s agreement with Metropolitan Life to
purchase a group annuity contract (the “Agreement”). Such
forward-looking statements are subject to risks, uncertainties and
other factors that could cause actual results to differ materially
from historical experience or from future results expressed or
implied by such forward-looking statements. Potential risks and
uncertainties include, but are not limited to, the satisfaction or
waiver of all closing conditions contained in the Agreement,
without unexpected delays or conditions; FedEx’s ability to
realize, or realize in the expected time frame, the anticipated
benefits from the transaction, or the amount of the expected
settlement charge; and other factors that can be found in FedEx
Corp.’s and its subsidiaries’ press releases and FedEx Corp.’s
filings with the SEC. Any forward-looking statement speaks only as
of the date on which it is made. We do not undertake or assume any
obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or
otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20180508006670/en/
FedEx Corp.Patrick Fitzgerald,
901-818-7300mediarelations@fedex.com
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