Alcoa Corporation Takes Additional Actions on U.S. Pension and Other Postemployment Benefit Obligations
August 08 2018 - 4:10PM
Business Wire
Actions align with Alcoa Corporation’s
strategic priority to strengthen balance sheet
Alcoa Corporation (NYSE: AA), a global leader in bauxite,
alumina, and aluminum products, announced today the signing of a
group annuity contract to transfer assets and related obligations
of defined benefit pension plans for certain U.S. retirees and
beneficiaries.
The Company also has made a discretionary contribution of $100
million to further fund its U.S. defined benefit pension plans.
Both the annuitization and the discretionary payment reduce the
risk to the Company associated with the volatility of its pension
obligations and align with Alcoa’s strategic priority to strengthen
the balance sheet.
As part of the annuity contract, approximately $290 million in
obligations and related assets will be transferred later this month
to Athene Annuity and Life Company, a subsidiary of Athene Holding,
Ltd. (NYSE: ATH).
Athene, through its subsidiaries, has more than 800,000
policyholders and is rated “A” from A.M. Best and “A-” from both
Standard and Poor’s Global Ratings and Fitch Ratings with $114.8
billion in assets as of June 30, 2018. It will assume benefit
payments for approximately 10,500 participants. Those payments will
begin in October of 2018; participants will not see any change in
the amount of their benefits.
Separately, Alcoa is notifying certain U.S. salaried retirees
that the Company will no longer provide retiree life insurance,
effective September 1, 2018. As part of this change, Alcoa will
make a one-time transition payment to the affected retirees
totaling approximately $25 million.
In connection with both the annuity transaction and the
elimination of retiree life insurance, Alcoa will record an
estimated non-cash net settlement charge of $184 million (pre- and
after-tax), or $0.98 per share, in the third quarter of 2018.
On July 18, 2018, Alcoa reported that its net liability for
pension and other postemployment benefits (OPEB) was $2.7 billion
as of June 30, 2018, down from $3.5 billion at year end 2017.
Today's announced actions will further reduce the net pension and
OPEB liability by approximately $175 million, before remeasurements
for affected plans, and will be reflected in the Company’s third
quarter 2018 financial results.
The year-to-date reduction in the referenced net liability
reflects several other actions taken in 2018, including the $500
million in debt proceeds used to make discretionary contributions
to U.S. defined benefit pension plans, the $105 million for
additional Canadian pension contributions, and other actions
related to pension and other postemployment benefits.
Dissemination of Company Information
Alcoa Corporation intends to make future announcements regarding
company developments and financial performance through its website
at www.alcoa.com.
About Alcoa Corporation
Alcoa is a global industry leader in bauxite, alumina, and
aluminum products, built on a foundation of strong values and
operating excellence dating back nearly 130 years to the
world-changing discovery that made aluminum an affordable and vital
part of modern life. Since developing the aluminum industry, and
throughout our history, our talented Alcoans have followed on with
breakthrough innovations and best practices that have led to
efficiency, safety, sustainability, and stronger communities
wherever we operate.
Forward-Looking Statements
This press release contains statements that relate to future
events and expectations and as such constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include those
containing such words as “anticipates,” “believes,” “could,”
“estimates,” “expects,” “forecasts,” “intends,” “may,” “outlook,”
“plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,”
“would,” or other words of similar meaning. All statements that
reflect the Company’s expectations, assumptions or projections
about the future, other than statements of historical fact, are
forward-looking statements. Forward-looking statements are not
guarantees of future performance and are subject to known and
unknown risks, uncertainties, and changes in circumstances that are
difficult to predict. Although the Company believes that the
expectations reflected in any forward-looking statements are based
on reasonable assumptions, it can give no assurance that these
expectations will be attained and it is possible that actual
results may differ materially from those indicated by these
forward-looking statements due to a variety of risks and
uncertainties. Additional information concerning factors that could
cause actual results to differ materially from those projected in
the forward-looking statements is contained in the Company’s
filings with the U.S. Securities and Exchange Commission. The
Company disclaims any obligation to update publicly any
forward-looking statements, whether in response to new information,
future events or otherwise, except as required by applicable
law.
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version on businesswire.com: https://www.businesswire.com/news/home/20180808005555/en/
Alcoa CorporationInvestor ContactJames Dwyer,
412-992-5450James.Dwyer@alcoa.comorMedia ContactJim Beck,
412-315-2909Jim.Beck@alcoa.com
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