On the go: The total volume of buy-in and buyout transactions reached £12bn in the first half of 2022, according to research from Hymans Robertson.
Demand for transactions was steady at the start of the year, gathering pace from the second quarter onwards, reaching a total of 78 transactions during H1 2022, the consultancy found.
With an average deal size of £153m, approximately 75 per cent of the total volume was in relation to buy-ins, with the remaining 25 per cent related to buyouts, it added.
According to Hymans Robertson head of risk transfer James Mullins, “widening credit spreads and insurers competing to meet new business targets led to highly attractive buy-in and buyout pricing” for defined benefit schemes during 2022.
“Over the past 15 years, around 80 per cent of the market has been pensioner buy-ins and 20 per cent has been buyouts,” he said.
“Going forward I expect that trend to reverse, with whole-scheme buy-ins and buyouts dominating the market from now on.”
Due to the “rapid growth in demand for pension schemes to insure their risks, along with improved pension scheme funding levels, attractive insurer pricing and new alternative risk transfer options”, Mullins expects there will be more than £50bn a year of transactions on average over the next 10 years.
“That means that by the end of 2031, £1tn of pension scheme liabilities will have been insured, covering 5mn members’ benefits,” he added.
