Welcome to our first 2016 edition of Buyout Market Watch. We analyse bulk annuity (buy-in/buyout) and other longevity de-risking market developments over 2015 and share our thoughts for the year ahead.
2015 was another busy year for the longevity de-risking market, with over £12bn and £9bn respectively of bulk annuity and longevity swap transactions written over the year. This reflects continued demand from trustees and sponsors to remove pension risk from their scheme and corporate balance sheets.
Whilst it has long been expected that most smaller, closed schemes are targeting eventual buyout, the trend for mega (multi-billion pound) schemes to successively buy in/out tranches of liabilities continues with the ICI Pension Fund completing a further four transactions to take its total liabilities insured to £5.4bn or over 50%. The Fund broke records last year with a £3.6bn buy-in deal.
Other schemes are pursuing longevityonly hedging solutions. 2015 saw more larger schemes employing non-traditional, more cost effective longevity swap structures and, at the other end of the scale, the first sub £100m “named life” longevity hedge.
New entrants have also increased competition for small-to-mid sized deals and innovative solutions, including JLT’s hybrid proposition, are helping trustees and sponsors achieve their varying objectives. This truly is a market for schemes of all sizes!
We hope you enjoy what is the first in our re-launched series of quarterly market updates!
Ruth Ward, Senior Consultant JLT BuyOut Team
Click here to download the Buyout Market Watch report.
If you have any comments or suggestions for what you would like to see covered in future editions we would love to hear from you, please do call us on 020 7558 3036.