UK risk transfer volumes have risen by 50 per cent from £7.8bn in H1 2021 with buy-ins and buy-outs totalling £12bn, making it the third greatest first half, according to LCP.
Aviva, Legal and General (L&G), Pension Insurance Corporation (PIC), Rothesay, and Standard Life all wrote over £1bn in buy-ins/outs in H1 2022.
With £3.7 billion in written buy-in/out volumes, L&G had 31 per cent of the market. With a 20 per cent market share and a significant rise over their H1 2021 volumes of £0.4bn, PIC came in second.
After that came Aviva and Standard Life, who each wrote £1.9bn, 16 per cent of the market, and £1.6bn, 14 per cent of the market. Rothesay wrote £1bn or 8 per cent of the market.
Just, Canada Life and Scottish Widows all wrote more than in H1 2021, with total volumes of £1.3bn in H1 2022 across the three of them.
The British Steel Pension Scheme’s £2.3bn follow-on pensioner buy-in with L&G represented the largest buy-in/buy-out in H1 2022.
LCP partner Charlie Finch says: “Buy-in and buy-out activity has continued strongly into 2022 with volumes increasing by over 50 per cent in the first half of the year compared to 2021. Activity has been ramping up over the second half and we expect to increase further in 2023.
“The activity has been driven by surging pension scheme funding positions on the back of the biggest rise in long-term interest rates this century (20-year gilt yields have more than trebled to 3.7 per cent pa since the start of the year).
“We expect this to turbo-charge demand from pension schemes looking to de-risk next year. The challenge is that insurers simply do not have the resources to quote on all of the opportunities that could come to market.
“The schemes that win will be those who have invested in preparation across cleaning data, drawing up detailed benefit specifications, getting their investments transaction-ready and putting in place suitable governance arrangements with the sponsor. Such preparation will pay dividends over the coming years.”
