In this Inside RGA Q&A, David Lipovics, Head of Institutional Markets, Americas Financial Solutions, discusses his journey into the actuarial field, key trends influencing the pension risk market – including new options for 401(k) plan sponsors – and how he’s passing on the Hungarian obsession with table tennis to the next generation.
In this Inside RGA Q&A, David Lipovics, Head of Institutional Markets, Americas Financial Solutions, discusses his journey into the actuarial field and key trends influencing the pension risk market – including new options for 401(k) plan sponsors.
Growing up in Budapest, I attended a public International Baccalaureate high school and studied advanced math there. For a long time I was torn between following a traditional math-oriented path and one of economics and diplomacy. But when I attended university at The London School of Economics and Political Science, I shifted to actuarial science. I was fascinated by how actuaries used math to solve critical real-world problems.
After a brief stint at AON, I pursued an actuarial graduate program while working as a consultant with PwC’s capital management and asset liability management teams. I discovered how life insurers were involved in large commercial deals that really made a difference for pensioners and the institutions sponsoring those pension programs. I also learned about reinsurance and the key role reinsurers played in these transactions. RGA was a quiet force at the center of many of these deals, and I eagerly joined their team in London when I had the opportunity.
After a few years leading reinsurance transactions supporting the UK pension risk transfer (PRT) market, I had the opportunity to lead the team tasked with building RGA’s presence in the US PRT market. We had to figure out our strategy with regard to these risks and how we could carve out a presence for RGA. That was a mission big enough and exciting enough for me to uproot my young family and move to RGA’s headquarters in St. Louis.
In my current role as Head of Institutional Markets, Americas Financial Solutions, I lead the businesses that service the US institutional retirement market. We are at the center of two major societal trends that will affect millions of people in the US: aging populations and the retirement protection gap. Like the rest of the developed world, a huge portion of the US population is either retired or approaching retirement. This shift will put an excessive burden on Social Security, a pressure compounded by increasing longevity – people are living longer and living longer with chronic diseases. For all those reasons, the insurance industry has an important role to play.
Right now, PRT is a large and buoyant market. RGA has launched a number of PRT transactions in the past few years, but we have barely scratched the surface. Less than 10% of US defined benefit plans have been de-risked. That’s $3 trillion in liabilities sitting on corporate balance sheets.
We’re closely focused on PRT because it aligns with our purpose to make financial protection accessible to all. As a life- and health-focused (re)insurer with significant underwriting experience and insights into future mortality, RGA has a strong offering for the market.
We expect continued growth in PRT based on prevailing economic and demographic trends. Any plan sponsors who think they can afford to do a de-risking exercise should make the move. Now is the time, and insurance carriers are here to help them.
All our work in PRT deals with defined benefit pensions, which was a benefit almost exclusively offered to the Baby Boomer generation – although only a third of Boomers have access to guaranteed pensions, actually. What’s happening for the rest of the 100 million of us working-aged people in the US? Most of us are hopefully putting away part of our paycheck into a 401(k) plan with a match from our employer. But that is not guaranteed income for our retirement years ahead.
How can the insurance industry partner with 401(k) plan sponsors to embed retirement income protection inside the 401(k) system? That is the question we’re trying to solve right now.
Congress passed regulations related to these efforts, the SECURE 2.0 Act of 2022, so our industry can start to develop insurance products for this specific need. We will see a lot of innovation and movement in this space in the next few years, and, again, RGA will be at the forefront. This is a societal need that is very in line with our purpose.
At the highest level, we are doing important work, and we are good at it. Again and again, we take our purpose statement – providing financial protection for all – and use that purpose to develop real business solutions. That is pretty remarkable. And we are making a real impact. Globally, we have taken on the financial risk of more than 2 million annuitants. In the US PRT market, we’re directly paying the pensions of over a hundred thousand people. That is a real-life impact that resonates with me.
The people at RGA are purpose driven, collaborative, and solution focused. We like to take on problems and figure out a way to get to “yes.”
My main hobby is racquet sports, and I get out to play tennis a few times a week. I actually started with table tennis, which, for whatever reason, is a hugely popular pastime in Hungary. I grew up playing table tennis in my garage nearly every day after school, usually facing off against my brother or stepdad. As we make trips back to Hungary with my 3-year-old son, I hope to soon teach him the ways of the paddle – topspin, smashes, backhand, and everything in between.
