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8 August 2019

Pension buy-ins and
buy-outs hit record £34bn over the past year as landmark deals complete

Analysis by Lane Clark & Peacock (LCP) shows that total buy-in and buy-out volumes by UK pension schemes reached £17.6bn in H1 2019 (H1 2018: £7.8bn) taking total volumes to £34.0bn over the 12 months to 30 June 2019.  This is the busiest 12-month period ever recorded, more than doubling the £14.9bn in the previous 12 months (to 30 June 2018).       

LCP’s analysis is based on insurer half year figures, including Aviva’s results today as the final insurer to report. Other findings in LCP’s analysis include:

  • 70% of H1 2019 volumes were written by Legal & General (L&G) and Pension Insurance Corporation (PIC) who between them absorbed most of the increase in volumes. L&G wrote £6.3bn (H1 2018: £0.5bn) and PIC wrote £6.0bn (H1 2018: £3.3bn) giving them a 36% and 34% market share respectively.  
  • The record £34.0bn volumes in the past 12 months included the three largest buy-in/out transactions ever: the £4.6bn pensioner buy-out by Rolls Royce in June 2019, the £4.4bn pensioner buy-in by British Airways in September 2018 and the £3.4bn buy-in by British American Tobacco in May 2019. There have been two further £1bn plus transactions to date in 2019 by the schemes of Marks & Spencer and Commerzbank. 
  • The £7bn longevity swap announced this week by HSBC is the second largest longevity swap ever but the first such transaction in the past 12 months.

Charlie Finch, partner at LCP commented:

Total first half volumes have comfortably topped £15bn in line with our predictions, marking a record half year for buys-in and buy-outs as activity continues at a frenetic pace.

“FTSE 100 transactions are continuing at a rapid pace. In the past week alone we have seen giant longevity hedging transactions announced by British American Tobacco and HSBC taking the number of FTSE 100 transactions to six so far this year.  Our team has had its busiest year to date, completing a record of £10bn deals so far in 2019 as large blue-chip companies increasingly seek specialist support to de-risk their schemes.

“Insurer pricing has held up well and we continue to expect 2019 full year buy-in and buy-out volumes to exceed £30bn as large transactions compete for market capacity in the second half of the year.”