On the go: Pension risk transfer volumes in the UK are expected to conclude the year at their second-highest level, according to Legal & General.
The forecast follows a bumper first half of 2022 for insurers. Aviva saw bulk annuity sales increase by 15 per cent, rising to £1.9bn, which compares with £1.6bn in the first-half of 2021.
Standard Life’s new business long-term cash generation comprised £282mn from its bulk annuities business, markedly up from the £80mn across the same period last year.
In the UK, L&G expects the volume of transfers for the first half of this year to be around £12bn, representing an approximate 50 per cent increase compared with the first half of 2021.
The insurer anticipates the overall volume in 2022 to reach £30bn to £35bn, which would make it the second-largest year ever in the UK market. This volume could potentially exceed £35bn depending on the number of large transactions that complete this year, the insurer said.
L&G’s first-half profits were underpinned by the performance of its annuities portfolio and the health of the global pension risk transfer market, which generated new business volumes of £4.4bn — up from £3.1bn in the first half of 2021 — with the £3.7bn in pension risk transfers exceeding the £2bn recorded in the same period last year.
In August, the insurer said it expected to write £40bn to £50bn of new pension risk transfers in the next five years.
“Insurers are working hard to meet the increased demand from pension schemes and we expect transaction volumes to continue to grow in future years,” said Chris DeMarco, managing director for pension risk transfer at Legal & General Retirement Institutional.
“Our message for pension schemes considering a buy-in or buyout transaction in this busy market is simple: schemes that engage insurers early, have flexible timeframes and have prepared thoroughly put themselves in the best position to secure a transaction which best meets their needs.”
