On the go: Buy-in and buyout transactions hit £27.7bn in 2021, with the majority of deals, representing £20.9bn, occurring in the second half of the year, according to new research.
Hymans Robertson’s Half Year Risk Transfer Report, published on June 17, showed the value of buy-ins was higher than buyouts during the year, £21.1bn and £6.6bn, respectively. Longevity swaps worth £15.2bn were also completed in 2022.
James Mullins, head of risk transfer at Hymans Robertson, said: “The impact of the pandemic continued to influence in early 2021. However, increased innovation in the longevity hedging space, led to a busy second half of the year, with total transactions at the second-highest level ever for a six-month period.
“With many of the insurers having been behind target by mid-2021, this created particularly strong competition towards the second half of the year.”
Hymans Robertson noted that the market is still experiencing high demand, and advises pension schemes to “carefully plan how they approach the insurance companies for buy-in and buyout quotations and demonstrate why they should be a high-priority case”.
“Insurers will undoubtedly favour those who have already done the necessary groundwork, and who can demonstrate a clear intent to transact,” it added.
Buy-ins, buyouts and longevity swaps have now insured more than £330bn of risk from defined benefit pension schemes in the past 15 years, since the bulk annuity market took off in 2007, the report noted.
The consultancy is expecting to see more than £50bn of buy-ins and buyouts, on average, over the next 10 years.
By 2031, Hymans Robertson expects around £1tn of pension scheme risk to have been insured or transferred to third parties, covering 5mn members’ benefits.
