Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • April 2013
04

Pension buy-in and buy-out deals hit £4.5bn in 2012

Open-access content Tuesday 2nd April 2013 — updated 5.13pm, Wednesday 29th April 2020

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.'

This article appeared in our April 2013 issue of The Actuary.
Click here to view this issue
Filed in
04
Topics
General Insurance

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Risk Actuary - General Insurance

London (Greater)
£60,000 - £85,000
Reference
145934

Project Actuary - Life Insurance

Midlands
£60,000 - £110,000
Reference
145933

Model Validation Actuary

London (Greater)
£60k - £80k
Reference
145932
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ