Bulk annuity insurers’ final figures for 2020 highlight trends in the Risk Transfer Market -
• The total value of buy-ins and buy-outs in 2020 was £31.3bn across 140 transactions, compared to £43.8bn across 153 buy-ins/buy-out in 2019.
• Around £25bn (c80%) of this was transacted by four of the eight insurers in the market, Legal & General, Rothesay, Aviva and Pension Insurance Corporation.
• The average buy-in/buy-out size in 2020 was £224m compared to £286m in 2019.
• Longevity swaps in 2020 covered £24.1bn of liability across eight transactions, compared to £10.8bn across three transactions in 2019.
“Buy-ins/buy-outs and longevity swaps have now insured £300bn of risk from DB pension schemes in the last 14 years, since this market took off in 2007. Interestingly, over half of that amount (over £150bn) has been transacted in just the last four years, which is a clear sign of the acceleration of growth in this market. Our projections show that we expect to see over £40bn of buy-ins and buy-outs on average over the next ten years. In 2020 the transactions were heavily weighted towards buy-ins, as opposed to buy-outs. However, over the next few years we expect to see a significant increase in the number of buy-outs as more pension schemes are seeing their funding levels improve.”
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