Despite predictions that 2024 will be the busiest year yet for de-risking, with a slightly slower start to 2024 insurers are predicting the market to close at between £40-50bn.
In its H1 report, Pension Insurance Corporation (PIC) noted it completed £3bn of new business across nine schemes, with a further £1.6bn committed by the end of August. The PIC added it expects the pension risk transfer market to end the year somewhere between £40-45bn.
Standard Life, meanwhile, noted in its H1 report that it wrote £1.7bn of annuity premiums, compared to £3.2bn in the first half of 2023, with a further £4m transacted since the period end and an additional £2.2bn of exclusive transactions in progress.
It added that after a quieter first half market, it expects to see a strong second half bulk purchase annuity (BPA) deal flow.
Aviva said it expects the 2024 BPA market to be “the largest on record” and with £1.5trn in defined benefit (DB) liabilities yet to transact, it expects the BPA market to “continue to grow in the short term”.
Just Group, meanwhile, noted it delivered 55 deals during the first half, a mix of small and mid-sized transactions – an increase on 35 transactions completed in first half of 2023. And Rothesay said it generated new business premiums of £9.5bn in the first half of 2024.
Hymans Robertson estimated that 134 buy-in transactions were completed so far, covering £15.3bn of pension scheme liabilities, compared to 96 transactions in the same period last year – representing a growth of nearly 40% year on year.
But despite a higher number of deals, LCP said that the volumes in the first half of the year were only the third highest H1 on record, down from £21.1bn in H1 2023.
This, LCP said, reflected the fact there were only two £1bn+ transactions in H1 2024, compared to five over the same period last year which included the largest ever single buy-in transaction by RSA at £6.5bn. The largest named transaction in H1 2024 meanwhile was the £1.2bn buy-in by TotalEnergies with PIC.
LCP said it expects volumes to accelerate over the second half of the year, driven by a flurry of “giant transactions” over £1bn. It said that insurers have disclosed that they have already written, or are exclusive on, a further circa £10bn of buy-ins/outs since the half-year point.
It said that £1bn+ transactions should reach double numbers over the course of the year, putting 2024 on par with the record 12 £1bn+ deals completed last year closing at around £40bn.
Hymans Robertson similarly expects that the market will close at around £40bn with 250 deals.
WTW’s deal tracker suggests the market will close at around £45bn but it said it will hinge on the success and timing of a handful of larger deals that are currently in the market. But at £45m it will make it the second busiest year ever, after 2023 closed just shy of £50bn.
New entrants
James Mullins, partner and head of risk transfer at Hymans Robertson, agreed that insurers have demonstrated they can “handle” record transaction numbers. He added that with new entrants to the market, it “won’t be long before we see 300 buy-ins in a single calendar year”.
This year also saw a number of new entrants announce their intention to enter the market including Brookfield, Royal London and Utmost, which are expected to formally enter the market in the near future.
WTW expects these new entrants will “shake up” the market in the coming months, adding that from discussions with potential new entrants it has a good understanding of their different proposition as they stand poised to enter the market, with each targeting different market segments and scheme portfolios.
It said that if all three of the potential new entrants join the market, this would be “great news” for pension schemes across the board.
Before the end of the year, there will be 11 insurers providing quotes on deals, more than ever before in the UK and showing the vibrancy of the market, WTW said.
Read the digital edition of IPE’s latest magazine
No comments yet