Pension schemes shifted almost £4.5bn of their liability risk onto insurers last year using buy-in and buy-out deals, according to new figures published by Hymans Robertson.
The consultancy's latest quarterly Managing pension scheme risk report shows that almost half of this activity was recorded in the final quarter of 2012, in terms of the both volume and total value of deals completed.
In total 56 deals were completed between October and December, with a combined value of just over £2bn. This contributed to a total of 167 buy-in and buy-out deals over 2012, worth a combined £4.49bn.
Hymans Robertson's figures show that insurance companies have now taken on the risks associated with over £50bn of pension scheme liabilities since 2006/07 and it expects this figure to rise to £100bn by the end of 2017 as demand for risk transfer continues to increase.
James Mullins, head of buy-out solutions for the actuarial consultancy, said: 'Buy-ins and buy-outs covered around £4.5bn of pension scheme liabilities in 2012 and the pricing of deals continues to look attractive in the current market.
'In addition to this, as banks and insurers offer more flexibility, deals will become increasingly affordable for many UK pension schemes.'
The buy-in and buy-out market was dominated last year by Aviva, Legal & General, MetLife, Pension Insurance Corporation, Prudential and Rothesay Life. Pension Insurance Corporation secured the largest chunk of the market with a 37% market share by value.
Mullins noted that the increased demand for risk transfer could lead to new providers entering the market for buy-ins and buy-outs during 2013.
The report also highlighted a number of major longevity swap deals, most recently the £3.2bn agreement reached by aerospace company BAE Systems with Legal & General in the first quarter of 2013. Longevity swaps, which involve schemes paying a bank or insurer to offset the risk of their members living longer than expected, have now covered almost £20bn of pension scheme liabilities since the end of June 2009.
Mullins added: 'Our clients are finding that the competition in the market is leading to some attractive pricing for removing longevity risk and this is a key driver for the recent level of longevity swap activity. We anticipate that this pace of activity will continue to accelerate and expect to see a number of large transactions complete this year.'