With eight active providers in the buy-in and buyout market, there is currently the highest level of competition since 2008, Lane Clark & Peacock (LCP) has revealed.

According to LCP, a total of £5.1bn pension buy-ins and buyouts were completed by UK pension plans in the first half of 2017, 88 per cent higher than the same time last year, which recorded a total of £2.7bn.

The increase signals that there has been “acceleration of de-risking activity” since the EU referendum and the market shows “no signs of slowing down”, LCP said.

Looking at insurers individually, the Pension Insurance Corporation (PIC) wrote the highest business, 37 per cent, totalling £1.9bn in the first half of 2017, while Legal & General (L&G) was second with 30 per cent, £1.5bn of business. Last year, L&G write the largest volume of transactions with 33 per cent of market share, followed by PIC with 25 per cent.

Phoenix Life joined the buy-in market at the eighth active provider targeting transactions over £250m, following the £1.2bn buy-in with its own pension plan at the end of 2016.

Moreover, LCP noted that there has been a record number of mid-sized bulk annuity deals with 14 transactions between £100m and £1bn in the first half of 2017. The largest is an unnamed £690m pensioner buy-in with PIC and two further unnamed transactions over £500m.

The largest named transactions in the first half of the year were a full buyout for Tullet Prebon with Rothesay Life, a £250m pensioner buy-in by Cancer Research with Canada Life and a £200m pensioner buy-in by 3i with PIC. There were also two longevity swaps completed: £800m by L&G and £300m by Zurich, both with unnamed pension plans.

Furthermore, LCP speculated: “The impact of a recent slowdown in life expectancy improvements is beginning to feed through into pricing, improving affordability. However, insurers and reinsurers remain cautious about translating recent experience into long-term trends.”

LCP partner Charlie Finch commented: “2017 has got off to a strong start seeing buy-in and buy-out volumes almost double in the first half and continuing the strong momentum since the EU Referendum with around £12.5bn written in the past 12 months. Pricing remains keen driven by a high level of competition – particularly for pensioner buy-ins over £100m – with eight insurers actively participating following Phoenix Life’s entry to the market.

“The start of 2017 has also seen the biggest fall in life expectancies this century with the latest mortality projections from the Continuous Mortality Investigation knocking 2 per cent to 3 per cent off pension liabilities. This reduction benefits pension plan funding and will make full buy-out transactions more affordable.”

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