The pension risk transfer (PRT) market in the UK exceeded u00a350bn in aggregate volume in 2023, a new record, according to consultancy firm, Hymans Robertson.
The firm has analysed 2023 full year results from a majority of insurers, and says that over 254 transactions took place last year with an average size of around u00a3190m, with over 158 transactions transacting in just the second half of the year.
u201cLast year (2023) was an incredibly busy year for the risk transfer market as many defined benefit pension schemes used their improved funding levels to target whole-scheme buy-in transactions,u201d said James Mullins, Head of Risk Transfer at Hymans Robertson.
Large transactions receive significant media coverage in the space, but according to Hymans Robertson, over 150 transactions concluded in 2023 were valued at under u00a3100m.
u201cItu2019s clear that large transactions are likely to continue to drive market volumes in 2024 and beyond. However, we also continue to see a healthy and competitive market for smaller schemes that want to transfer risk. For instance, all our buy-ins transactions under u00a330m received quotations from multiple insurers in 2023,u201d said Mullins.
Hymans Robertson also expects the UK PRT market to sustain the activity levels of 2023, and Mullins points to two key reasons why.
u201cFirstly, there are over 15 buy-in transactions due to come to market over the next few months that are each between u00a31bn and u00a32bn. This group of large transactions alone add up to around u00a330bn and thatu2019s before we take into account the material flow of buy-ins that are less than u00a31bn, along with mega transactions that are several u00a3billion in size,u201d Mullins said.
u201cSecondly, there has been a high volume of transactions at the start of 2024, despite January and February tending to be quieter months for the buy-in market. For example, the risk transfer team at Hymans Robertson has already led on over u00a33bn of completed transactions in the first two months of the year,u201d he added.