On the go: Total pension scheme buy-in and buyout volumes over the first half of 2021 are expected to reach more than £8bn, according to new analysis by Hymans Robertson.
During the six-month period, six of the eight insurers operating in the risk transfer market in the UK reported figures for buy-ins, buyouts and assured payment policies, with a total value of £7.3bn.
Hymans Robertson said that Pension Insurance Corporation and Canada Life are yet to report, but noted that on July 29 LCP acted as a lead transaction adviser on the purchase of a buy-in policy by the British American Tobacco UK Pension Fund, with PIC insuring around £400m of liabilities.
By comparison, total pension scheme buy-in and buyout volumes stood at £12.6bn in the first half of 2020 and £18.8bn in the second half of last year, according to Hymans Robertson.
With volumes in the first half of this year lower than insurers anticipated, there should still be opportunities for well-prepared schemes to gain competitively priced buy-in quotations over the next few months, the consultancy said.
James Mullins, head of risk transfer at Hymans Robertson, said: “With just £7.7bn of confirmed buy-ins and buyouts so far in the first half of this year, the market has been quieter than anticipated.
“The slow start was partly because the end of 2020 was busy and a quieter period has followed. It’s not a reflection of lockdown or a sign of reduced appetite.
“Despite the slow start, insurers still have business targets to aim for and the market has become extremely busy in recent weeks. As a result, the expectation is that the market will still reach more than £25bn this year,” he continued.
“We could well be in for a repeat of 2018, where the busyness written over the second half of the year more than doubles the business written over the first half of the year.”
Mullins said pension scheme funding levels have improved in recent years and so schemes are “better able to afford this insurance for their members”.
