AC is seeking finance min appr to form its own life Insuranc
MONTREAL Air Canada is seeking finance ministry approval to form its own life insurance company as a gateway to the annuities market and a hedge against looming pension payouts. A spokesperson says the airline aims to shore up pension risks by buying annuities from Canadian insurers and reinsuring the fixed payments through an insurance subsidiary. The Montreal-based carrier plans to purchase the annuities over several years, starting in 2019. The countrys largest airline currently doles out $725 million in annual pension payouts. That number is projected to grow to more than $900 million in a decade. Air Canada says the national market is too small to bear such big annuities purchases. The airlines defined benefit pension plans cover nearly 53,000 employees roughly half of whom are retired and carry a solvency surplus of $2.6 billion. Companies in the story: (TSX:AC)