The outlook for the risk transfer market is bullish following a record second half of 2024, says Hymans Robertson.
Between July and the end of December, 165 deals collectively worth £32.6bn were agreed, the highest levels in the market since £28bn was transacted in the second half of 2023.
“Looking ahead, we expect the high number and value of buy-ins in 2024 to be the new norm,” said Lara Desay, head of risk transfer at the consultancy.
This she puts down to new players entering the market, including Royal London and Utmost, which should enhance competition and help meet growing demand driven by improved funding levels.
“The risk transfer market will continue to go from strength to strength providing excellent opportunities for pension schemes in 2025 and beyond,” Desay added.
Defined benefit schemes moving from buy-in to buyout could be another catalyst of demand, causing what Desay described as a “bottleneck”.
“Insurers need to invest in their post-transaction operations to effectively manage this demand.”
And insurers are expected to continue to streamline their processes and make them more efficient. “We expect innovation to grow throughout the risk transfer market as the sector continues to expand,” she added.
In 2024 as a whole, 299 deals were agreed for a combine value of £47.8bn.
Larger schemes dominated the market in the second half with 12 buy-ins each worth at least £1bn. They accounted for almost two-thirds (65%) of the bulk annuity market during the period.
Other highlights included M&G completing its first “value-share” bulk purchase annuity transaction, and Clara Pensions, which wants to be a ‘bridge to buy-out’ closing two transactions.
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