165 deals were transacted from 1 July to 31 December 2024 in the DB pension scheme risk transfer market, with a total value of £32.6 billion, marking a record-breaking second half of the year, according to a recent Hymans Robertson report.
This beats the previous record set during the second half of 2023, where the total value of deals completed was £28 billion.
The total value of buy-in deals completed in 2024 was £47.8 billion.
Large defined benefit (DB) schemes continue to dominate the risk transfer market. Six insurers executed 12 buy-in transactions exceeding £1 billion each, collectively amounting to over £20 billion in the latter half of the year.
These deals represented nearly two-thirds (65%) of all bulk annuity transactions during this six-month period.
As insurers streamline their processes, small scheme capacity has increased, with this market also reaching a record number of transactions, analysts noted.
The report also pointed to innovation within the bulk annuity sector and alternative risk transfer offerings in 2024. M&G finalized its inaugural “value-share” bulk purchase annuity transaction, while Clara-Pensions secured two transactions, furthering its role as a “bridge to buy-out.”
Commenting on the findings from the H2 2024 report, Lara Desay, Head of Risk Transfer, Hymans Robertson, says: “As expected, 2024 was another record-breaking period for the risk transfer market. The volume of transactions has helped to drive innovation across the market, with new entrants Royal London and Utmost increasing competition. Small schemes have capitalised on their improved funding levels throughout this year, helping to secure benefits with insurers, as competition continues to grow in this area of the market.
“To help meet the increased demand across the board, insurers have continually strived to streamline their processes and make the buy-in journey more efficient. We expect innovation to grow throughout the risk transfer market as the sector continues to expand. However, there are areas to watch, and challenges to consider.”
A potential bottleneck could arise from the anticipated movement of numerous bought-in schemes towards buy-out in the near future, Desay cautioned, advising insurers to invest in their post-transaction operations to effectively manage this surge in demand.
She continued: “Trustees should carefully review each insurer’s administration, and transition processes, prior to starting their own buy-out journey.
“Looking ahead, we expect the high number and value of buy-ins in 2024 to be the new norm. The influx of new entrants should enhance competition and help meet the growing demand with the number of insurers in the market hitting an all-time high.
“The risk transfer market will continue to go from strength to strength providing excellent opportunities for pension schemes in 2025 and beyond.”
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