Pension risk transfer volumes decline in H1 2021

Total volumes of pension scheme buy-ins and buyouts are expected to reach over £8bn in the first half of 2021, according to analysis by Hymans Robertson.

There has already been £7.7bn of confirmed transactions during the first half of the year, with Hymans estimating that this figure will exceed £8bn once all transactions are confirmed.

This represents a marked decline in total volumes in comparison to H1 2020, when £12.6bn worth of deals were completed.

However, Hymans said it expected pension risk transfers to increase in H2 2021 and reach over £25bn this year.

Hymans noted that, as the volume of deals in H1 2021 were lower than insurers would have expected, there should still be opportunities for well-prepared schemes to get competitively priced buy-in quotations over the next few months.

“With just £7.7bn of confirmed buy-ins and buyouts so far in the first half of this year, the market has been quieter than anticipated,” commented Hymans Robertson head of risk transfer, James Mullins.

“The slow start was partly due to the fact that the end of 2020 was so busy and a quieter period has followed. It’s not a reflection of lockdown or a sign of reduced appetite.
 
“Despite the slow start, insurers still have business targets to aim for and the market has become extremely busy in recent weeks. As a result, the expectation is that the market will still reach over £25bn this year.

“We could well be in for a repeat of 2018, where the busyness written over the second half of the year more than doubles the business written over the first half of the year.
 
“Hymans Robertson’s risk transfer team has led the advice on over £2bn of buy-ins so far during 2021 and we’ve seen a further increase in demand from schemes and expect this to continue for the rest of the year. There’s no doubt that the second half of 2021 will be a busy period.”

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