Buyout Market Watch MARCH 2019

27 March 2019

Welcome to our first Market Watch of the year, reflecting on an exceptional 2018 and looking forward to 2019, with another bumper year expected.

2018 ended with the highest level of pension risk transfer ever seen in the UK market, with £36bn of bulk annuities transacted by insurers, plus £10bn-£20bn of individual transfers away from defined benefit schemes and £3bn of longevity swaps written. Large transactions hit the headlines, with notable deals including the £4.4bn Airways Pension Scheme buy-in, the £2.4bn Nortel Networks UK Pension Plan buyout and the transfer of £12bn of Prudential’s back book to Rothesay Life. However, schemes of all shapes and sizes completed transactions, keeping insurers extremely busy with the market running close to peak capacity.

WHAT FACTORS LED TO 2018 BEING SUCH A SUCCESSFUL YEAR?

  • Fierce competition between eight insurers and the most attractive pricing we have seen in a decade

  • Strong demand from trustees and sponsors to de-risk their schemes/balance sheets

  • An on-going improvement in many schemes’ funding levels and a rapid aging of their memberships.

These factors all remain relevant and, with insurers reporting even heavier pipelines, we expect 2019 to be at least as busy. In this issue, we will be reviewing the market, celebrating the first anniversary of JLT’s revolutionary Buyout Comparison Service, as well as discussing GMP equalisation for schemes approaching buyout, liability management and, everyone’s favourite subject, data. Thanks to our guest contributors – legal advisers Squire Patton Boggs and DLA Piper.

We hope that you enjoy this issue of Market Watch.

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