On the go: The number of small scheme buy-ins and buyouts could increase by 25 per cent in 2020, according to research from LCP.
While the number of transactions under £100m fell by 30 per cent to 106 in 2019 from 150 in 2014, a sharp uptick in the number of schemes looking to take advantage of attractive insurer pricing has led LCP analysts to predict that 2020 will prove a strong year for smaller schemes.
Commenting on the research, David Stewart, partner at LCP, said: “The number of smaller transactions has been falling in recent years, so we are really pleased to have seen a surge in smaller transactions completing through our streamlined process in recent months.”
While the market has recently been dominated by a large number of so-called mega-transactions, a recent study by Willis Towers Watson suggested there is likely to be fewer multibillion bulk annuity deals in 2020, a prediction backed up by LCP’s own research.
This “should help open the door for smaller schemes that are transaction ready and use a streamlined approach to market that is attractive to insurers”, Mr Stewart said.
“Despite the upheaval of Covid-19, we continue to complete transactions and are expecting the number of transactions under £100m will increase by 25 per cent this year.”
As reported by Pensions Expert on May 21, the already booming market for buy-in and buyout deals has been further boosted by the turmoil brought about by the pandemic, with best-ever pricing for insurance combining with record demand for shedding investment risk.
