CBS Corp. has agreed to transfer $800 million in pension liabilities to an insurance company, becoming the latest company with a pension plan working to limit its exposure to volatility in markets and interest rates.
The media company said in a securities filing Monday it would buy a group annuity contract from an insurance company, which will assume responsibility for paying and administering pension benefits to plan beneficiaries. CBS, which didn't name the insurance company it bought the contract from, said it reached the agreement Nov. 1.
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The move will reduce CBS's pension plan obligations by about 20%.
The company expects to incur a $365 million pretax pension-settlement expense in the fourth quarter related to the transaction.
CBS also said in the filing that during the quarter, it expects to make a $500 million contribution to prefund its qualified pension plans, which will be funded in part with long-term debt.
Pension-risk transfers have become increasingly common among large companies, and they may become more prominent as interest rates rise, making it less expensive for employers to offload pension obligations. While Prudential has led the insurance industry with high-profile pension-risk deals, MetLife Inc. and smaller insurers have also gotten involved.
Last week CBS said earnings rose to $592 million, or $1.46 per share, in its latest quarter from $478 million, or $1.07 per share, a year earlier. On an adjusted basis the company reported earnings of $1.11. Revenue rose 2.8% to $3.17 billion.
Analysts polled by Thomson Reuters had forecast earnings of $1.07 per share on $3.26 billion in revenue.
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(END) Dow Jones Newswires
November 06, 2017 07:44 ET (12:44 GMT)