Further evidence that the bulk annuity market has continued to falter has come from Hymans Robertson, with the firm's latest analysis of the pension scheme de-risking market showing that £600million worth of buyout and buy-in deals were completed in the second quarter of 2009.

The quarter brings the total for the first half of 2009 up to £1.5bn, which the actuarial consultancy claims is less than 40 per cent of the deals struck over the
same period in 2008.

The average deal size has also fallen to less than £20million, according to James Mullins, a senior liability management specialist at the firm. In contrast, the DIY buy-in and longevity hedge market has seen two massive deals struck during 2009, covering £2.7bn of pensioner liabilities.

Mullins said the company expects to see a continued increase in the appetite for pension scheme de-risking, which recent volatility has fed. He added that it is significant to see two high profile insurance companies, Friends Provident and RSA, completing de-risking deals on their own final salary schemes.

Richard Shackleton, an expert in pension scheme settlement solutions at Hymns Robertson, said: "In the short-term however, significantly increased pension scheme deficits and corporate cash constraints mean that the total value of buy-in and buyout deals in 2009 is likely to be significantly lower than 2008. During 2009, buyout and buy-in deals are likely to be dominated by pension schemes that have already taken steps to de-risk (and so did not suffer the equity falls during 2008) and pension schemes whose sponsoring employer has become insolvent."

MetLife was named as one of the successful companies, writing £234million of deals in Q2 2009, followed by a further £118million in July 2009. Legal & General, however, still takes top spot with £704million of deals for H1 2009.

Shackleton added: "We fully expect several larger traditional buy-in deals to be transacted during the remainder of 2009 and this is a view that is shared by several of the insurance companies.

"Longevity hedging is likely to continue to receive significant interest during the remainder of 2009 and beyond. Longevity hedging deals will be most common for large pension schemes who believe that the best way for them to de-risk is to carry out a DIY buy-in. Indeed, following the Babcock International and RSA deals, we are aware of significant interest from other large schemes to carry out a longevity swap as part of a DIY buy-in."

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