UK & US PRT markets expected to exceed £250bn in three years: Legal & General

The UK and US Pension Risk Transfer (PRT) markets are experiencing exceptionally strong demand, with insurers expected to secure over £250 billion in combined volumes over the next three years, according to Legal & General.

The latest edition of Legal & General’s PRT monitor revealed a surge in large pension plans entering the market in both countries, setting the stage for one of the sector’s biggest years yet.

To demonstrate this growth, the firm highlighted two of the year’s largest transactions, both conducted by Legal & General: a £900 million buy-in with the ICI Pension Fund and a £1.1 billion buy-in with the SCA UK Pension Plan.

Smaller schemes are also thriving, with transactions under £100 million more than doubling between 2020 and 2023. Examples this year include a £21 million buy-in with the Leprosy Mission Central Pension Scheme and a £16 million buy-in with the John Graham (Dromore) Limited Pension and Life Assurance Scheme.

The monitor projects UK market volumes to exceed £40 billion in 2024. So far, the UK PRT market has completed an estimated £20 billion in buy-ins and buyouts, with another £20 billion of active deals expected to close in 2024. This marks a significant increase in capacity and a sharp rise in volumes compared to just two or three years ago.

Legal & General also noted that its long-term pipeline is the largest it has ever seen, and it expects PRT volumes to remain strong over the next decade.

The company aims to write £50-65 billion of UK PRT business over the next five years, in line with its new strategic goals.

At its 2024 Half Year Results, the Group reported that it had written £5 billion of transactions. The US PRT market saw a record $14.6 billion in Q1, contributing to a total of $26 billion in the first half—a 15% increase from H1 2023. Full-year US market volumes are expected to exceed $50 billion, surpassing 2023’s $46 billion and approaching the 2022 record of $51.9 billion.

As in the UK, growth in the US is driven by transactions over $1 billion, with five deals totalling roughly $16 billion in H1.

Legal & General completed $548 million in US PRT business, marking its second-largest H1 ever, and continues expanding its international footprint.

Andrew Kail, CEO at Legal & General, Institutional Retirement, commented, “We are continuing to see exceptionally strong demand in both the UK and US PRT markets, with more than £250 billion of combined UK and US volumes expected over the next three years. This forecast supports our strategic ambitions to grow our PRT footprint, generating permanent capital to catalyse growth in our Asset Management division.

“At L&G, strong synergies across our divisions enable us to build long-term relationships with clients and support them from investment strategy to transaction execution, as well as providing first rate customer care and administration expertise. We are confident that we will continue to deliver exceptional value to our members, clients, and shareholders.”

George Palms, President at Legal & General Retirement America, stated, “The US PRT market experienced its strongest H1 on record this year, driven by pension funding ratios that soared to 109.5% in July. The average transaction premium rose by 20% when compared to H1 2023, reflecting the growing demand for buyouts and buy-ins from large US pension plans. With the year expected to rank among the largest ever for this market, we’re well-placed to serve plan sponsors seeking to insure their members’ benefits.”

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