The value and number of buy-in and buy-out transactions on DB schemes reached new record levels in 2023, topping almost £50bn according to new data from Hymans Robertston.
Figures for the second half of 2023, show that the value of these transactions totalled £28bn — 30 per cent increase on the first six months of the year, and a 75 per cent increase on the same six month period in 2022.
This brought to total value of transactions for the year to an all time high of £49.1bn.
Hymans’s half year risk transfer report shows that in the second half of 2023 more than 60 per cent of the bulk annuity market by value resulted from seven deals in excess of £1bn.
In total, 226 transactions took place during 2023 with an average size of around £217m, and 130 deals transacted in the second half of the year. The pensions consultancy is predicting that this high rate of activity will continue in 2024, which could be another record year for the buy-in market.
Hymans Robertson partner and head of risk transfer solutions James Mullins says: “Record transaction pipelines and activity are set to make 2024 yet another bumper year for the buy-in market. Even though January and February are usually quiet months for the buy-in market, the start of 2024 was a busy time for our risk transfer team, which led on more than £3bn of completed transactions in the first three months of the year.
“Many DB schemes have continued to use their improved funding levels to target whole-scheme buy-ins. As they did in 2023, our expectation is that large transactions are likely to continue to drive market volumes in 2024 and beyond.
“Over the next few months, we expect around 15 buy-in transactions in the range of £1bn-£2bn to come to market. This £30bn of transactions will join a material flow of sub-£1bn buy-ins and several-billion-pound mega transactions.
“Changing market conditions have increased the capital insurers have to write new business. As the insurers’ back books mature, capital reserves can be freed up and allocated for new transactions.”