Welcome to our fourth 2016 edition of Buyout Market Watch. As schemes and sponsors focus on activities to be closed off this year, they cannot ignore the significant uncertainties that lie ahead. The US’s decision to elect Donald Trump, the UK’s deliberations on what “Brexit” should look like and important upcoming elections in France, Italy and Germany mean that now, more than ever, is no time to be complacent about the risks schemes are running.
The response is a measured assessment of interrelated risks and potential pursuit of de-risking activities and market-related opportunities, where achievable. The recent upwards creep of long-term interest rates may be seen by many as offering both relief and pricing opportunities, although, as we explain in our final article, low interest rates are no reason to postpone a buy-in/buyout investment.
Whilst new business volumes will almost certainly finish lower for 2016 compared to the last two years, momentum is building towards the year end. When back-book transactions totalling £9.4bn are taken into account, overall capacity deployed is broadly comparable.
The first £1bn+ deal for the year was announced in November 2016, and there’s been good news for small schemes too. Aviva have transacted the first deals through their “streamlined” proposition for as little as £650k, with JLT advising the first of these. The smallest longevity swap, at £50m, was also written by Zurich Assurance.
Our report features: key developments | The market in numbers | Spotlight on pricing | Special feature: bulk annuity investments in a low interest environment |
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