AMSTERDAM, Netherlands, Dec. 18, 2013 (GLOBE NEWSWIRE) -- AkzoNobel today announced that it has agreed to transfer its obligations for monthly pension payments for current retirees in the US to insurance company MetLife.
The annuity purchase is expected to reduce AkzoNobel's US pension obligations by approximately $655 million, or 65 percent, of the total US pension plan. In recognition of the premium payable to MetLife, and in order to maintain its pre-transaction funded status, AkzoNobel has paid a contribution to the pension plan of $170 million.
"Part of our strategy is to de-risk pension liabilities over time," explained AkzoNobel CFO Keith Nichols. "This transaction will improve the company's financial health by reducing the risk of a significant unexpected business expense due to the volatile nature of maintaining a defined benefit pension. At the same time, this allows AkzoNobel to focus on its core businesses and serving its customers."
The annuity purchase will cover around 9,400 US retirees and beneficiaries who retired prior to October 2013. The payment administration for the pension benefits is expected to transfer to MetLife by the end of Q1 2014.
During Q4 2012 and Q3 2013, AkzoNobel offered eligible former US employees a lump sum payment option as a replacement for a future pension benefit under the pension plan. More than 5,700 former employees elected for the lump sum payment - which already reduced the total pension obligation by $180 million.
After the lump sum payment and annuity purchase, AkzoNobel's US pension obligations will have reduced by $835 million to approximately $355 million.
AkzoNobel is a leading global paints and coatings company and a major producer of specialty chemicals. We supply industries and consumers worldwide with innovative products and are passionate about developing sustainable answers for our customers. Our portfolio includes well-known brands such as Dulux, Sikkens, International and Eka. Headquartered in Amsterdam, the Netherlands, we are consistently ranked as one of the leaders in the area of sustainability. With operations in more than 80 countries, our 50,000 people around the world are committed to delivering leading products and technologies to meet the growing demands of our fast-changing world.
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AkzoNobel press release http://hugin.info/130660/R/1750542/589952.pdf
Source:Akzo Nobel NV