The UK’s Philips Pension Fund has completed a full buyout, transferring £2.4bn (€3.3bn) to Pension Insurance Corporation (PIC).

The transaction, covering 26,000 scheme members, saw PIC simultaneously transfer all associated longevity risk to Hannover Re, the insurer said in a statement.

It comes only a few months before UK insurers will be forced to increase capital reserves as a result of Solvency II, widely expected to increase the cost of such bulk annuity deals.

Jay Shah, PIC’s head of origination, said reducing risk was gradually becoming “part and parcel of modern commercial thinking”.

The deal by the Dutch company’s UK subsidiary, the largest full buyout to date, is unlikely to be overshadowed by further transactions before the end of the year, according to David Collinson, PIC’s head of strategy.

“I would expect there would be a steady flow of deals completing before the year-end,” he said, when asked if the increased transaction price resulting from Solvency II would act as an incentive to finalise deals.

However, he argued that it was unlikely any of PIC’s competitors would withdraw from the market as a result of the new capital requirements.

“By necessity, the players in the bulk annuity market have to have capital and feel comfortable with their capital position,” he said.

“Companies will be aware where their Solvency II position is landing. They will have been liaising with the Prudential Regulation Authority over the course of this year.

“In a sense, any retrenchment I would have expected to have happened already, rather than at cut-off next year. People know where they are hopefully landing on Solvency II.”

The £2.4bn deal significantly boosts the volume of bulk annuity transactions for 2015, which, according to Aon Hewitt, stood at £4.4bn by the end of June.

However, the current volume of deals remains short of 2014’s £12bn in transactions. 

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