Total pension scheme buy-in and buy-out volumes totalled £27.7bn in 2021, according to Hymans Robertson report.
The Half Year Risk Transfer Report, showed that £20.9bn of pension scheme liabilities were covered by buy-ins and buy-outs across 97 transactions in the half-year to 31 December 2021.
This showed to be the third-highest year on record, according to Hymans Robertson. The £27.7bn followed a total of £31.4bn for 2020, with £18.8bn covered in H2; and a total of £43.8bn in 2019, with £26.3bn covered in H2.
The top three providers, out of eight, during the year in terms of the value of deals written were Aviva, who took the largest market share with 22% by total value; followed closely by Standard Life with 20%; and Legal & General with 19%.
According to the consultant, with demand in the market still high, pension schemes need to carefully plan how they approach the insurance companies for buy-in and buy-out quotations and demonstrate why they should be a high priority case.
The consultant also noted that there were four significant longevity swaps conducted in 2021, covering £15.2bn of liabilities.
One swap was entered into in the second half of 2021, which was a £2.6bn transaction between MetLife and an undisclosed pension scheme, using Zurich as an intermediary.
James Mullins, Head of Risk Transfer at Hymans Robertson, commented: “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 ever level for a six-month period.
He added: “With many of the insurers having been behind target by mid-2021, this created particularly strong competition toward the second half of the year.
“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, means that we expect around £50bn a year of buy-ins and buy-outs on average over the next 10 years, in addition to longevity swaps.
“That means that, by the end of 2031, £1 trillion of pension scheme liabilities will have been insured, covering 5 million members’ benefits.”
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