The first half of 2024 has seen a record number of buy-in transactions for a six-month period according to new data from Hymans Robertson.
Its analysis shows there 134 buy-ins over this period, compared to 96 in the same period the year before — almost a 40 per cent increase.
Hymans Robertson’s risk transfer team led the advice on two-fifths of all buy-ins by value during this period, and has used this data set, along with information from the insurance companies, to analyse buy-in market activity.
It found that that the buy-in transactions covered £15.3bn of pension scheme liabilities. On top of this activity Hymans points out that there was a number of other material risk transfers transactions taking place of this period.
This included the competition of largest superfund transaction, with Clara-Pensions taking over the £600m Debenhams Pension Scheme. Rothesay also acquired a £6bn Scottish Widows buy-in portfolio and Hymans says it also advised on a £700m captive insurance transaction.
Looking ahead the firm anticipates a similar level of business from the rest of the year, forecasting more than 250 buy-ins in total for 2024. This would be the highest number of buy-ins in a calendar year since the market began in 2006 – although the value of these transactions is likely to be less than that seen in 2023.
It is expected that these buy-ins will cover around £40bn of pension scheme liabilities during the whole of 2024. Hymans Robertson partner and head of risk transfer James Mullins says this builds on the £49.1bn record set in 2023.
He adds: “The insurers have demonstrated that they can handle record buy-in transaction numbers. Helped by the new entrants, I expect it won’t be long before we see 300 buy-ins in a single calendar year. The vast majority of these transactions are ‘whole-scheme buy-ins’, many of which will subsequently be looking to move to buy-out.
“That could create an administration bottleneck and so trustees need to carefully test their chosen insurance company’s capacity for ongoing administration and the transition to buy-out.
“The superfund and captive insurance transactions, that we completed this year, show that there is now a wider range of transaction types than ever before. Pension scheme trustees and sponsoring employers need to understand the pros and cons of the different options to work out which risk transfer transaction best meets their objectives.”