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
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • March 2014
03

2013 'record year for pension buy in/buy out activity'

Open-access content Friday 14th March 2014 — updated 5.13pm, Wednesday 29th April 2020

There was an increase in pension buy-ins and buy-outs last year as affordability increased due to higher gilt yields and a rise in UK equities, actuarial firm LCP said today.

LCP's analysis of insurance data showed that 2013 was the most active year ever for buy-in, buy-out and longevity swap activity, worth over £16bn of liabilities hedged. It said this was made up of £7.4bn of buy-ins and buy-outs, together with five large longevity swaps adding a further £8.9bn.

According to LCP's data analysis, Pension Insurance Corporation was the lead insurer for 2013 with £3,745m of buy-ins and buy-outs, giving the firm a market share of 50%. In second place was Rothesay Life with a 20% market share with £1,670m of buy-ins and buy-outs. Legal and General placed third with £1,314m, equating to an 18% market share.

In 2014, LCP predicts that the buy-in and buy-out volumes will be larger than the £7.4bn seen in 2013 and could exceed £10bn for the first time. For the same year, longevity swaps are expected to be concentrated in a relatively small number of high value transactions. Despite expectations that that the market will become more accessible for smaller pension schemes, LCP anticipates that longevity swaps will continue to be limited to larger plans in 2014.

LCP partner Emma Watkins said: '2013 has beaten all years on record. We saw a general increase in activity and interest, particularly from large pension schemes, with the average transaction size increasing by over 30%. With affordability increasing due to higher gilt yields and a 20% rise in UK equities, we can only see activity levels going up in 2014.

'We have every reason to expect that 2014 volumes will continue the positive momentum from last year. As pension plans hedge larger proportions of their interest rate and inflation risk, longevity risk will become a more significant part of every pension plan's remaining risks. 

'A buy-in or longevity swap is a natural way to hedge this risk and we can see this trend coming through in the 2013 statistics.'

 

 

This article appeared in our March 2014 issue of The Actuary.
Click here to view this issue
Filed in:
03
Topics:
Pensions

You might also like...

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

Latest Jobs

Senior Underwriting Risk Manager

London (Central)
£85K-£95K + Benefits
Reference
124386

Reserving Manager (Contract)

London (Central)
£1200 - £1400 per day
Reference
124385

Life Actuary - Contract - IFRS 17 Financial Impact

England, London / England, Bristol / North Yorkshire, England
£900 - £1150 per day
Reference
124384
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

© 2022 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