Morgan Stanley

Morgan Stanley & Co. Incorporated

Kenneth Robert Pierce

Caitlin Long

Duane Lauren Hughes

William Edward Ryan, Iii

Disclosed herein is a system and method for terminating a pension plan through mutual annuitization. A mutual annuitization involves the formation of a new and dedicated mutual insurance company that issues group or individual annuity contracts to plan participants in a private pension plan. The plan sponsor would neither own any stock in the mutual insurance company, nor would it have voting or control rights or any right whatsoever to participate in the profits of the mutual insurance company. As a mutual insurance company, there are no shareholders as such. Instead mutuals have members, and it is the members who enjoy governance rights and participation rights in the company's profits, such as through policy dividend payments. In the mutual insurance company of the present invention, the pension plan participants are the mutual insurance company's sole members. The pension plan terminates following payment of a premium by the pension plan to the mutual insurance company for the issuance of the annuities, and the subsequent issuance of annuity contracts by the mutual insurance company to the plan participants. The premium is calculated based on a reduced cost of capital requirement over the life of the policy due to a reduction in the C4 component to zero after the first year of the program. The capital required to cover the C4 charge in the first year may be provided by a third party according to a surplus note or surplus maintenance agreement.

System and method for termination of pension plan through mutual annuitization

A process that provides protection to an entity against the risk that a third party experiences a credit-related problem as a result of, or following a fortuitous, identifiable, insurable event, where the entity is exposed to the credit risk of the third party. The process may comprise the step of entering into, by the entity, an insurance agreement with an insurer, wherein the obligations of the insurer under the insurance agreement are triggered upon the occurrence of both (1) a credit-related problem of the third party and (2) the event. The entity may be, for example, a person or a business. Where the entity is an insurance provider, the insurer may be a reinsurer, and the insurance agreement between the two may be a reinsurance agreement. The credit-related problem of the third party may be a solvency problem or a failure to borrow a certain amount of money on the part of the third party. The failure to borrow may arise out of a failure to obtain a loan on the part of the third party or a failure to raise by the third party the certain amount of money through the issuance of debt or equity securities.

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Port Washington, NY, United States of America

Kenneth Robert Pierce