The new data, compiled by Lane Clark & Peacock LLP (LCP) based on the insurers’ results published this week, also shows that final buy-in and buy-out volumes in 2015 reached £12.3bn in the UK – falling only just short of the £13.2bn record set in 2014.
LCP’s analysis of insurer buy-in and buy-out data for 2015 reveals:
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Pension Insurance Corporation (PIC) had the largest market share with £3.8bn or 31% of the total. This included a £2.4bn transaction with the Philips Pension Fund as the final step in their £3.5bn full buy-out – the largest full buy-out to date.
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Legal and General (L&G) saw transaction volumes in the UK decline to £2.0bn from £6.0bn in 2014, as they focused on preparing for Solvency II and developing their overseas offering, but their market share in the UK at 16% was still third largest, after Rothesay Life.
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Medically underwritten buy-ins reached nearly £1.5bn for 2015, 12% of total volumes and more than double the £0.6bn written in total prior to 2015. This included the largest medically underwritten buy-in to date at £230m by L&G in December and £1.2bn of business by Just Retirement and Partnership.
Commenting on the activity in 2015, Charlie Finch, partner at LCP said: “The final quarter of 2015 saw over £5bn of buy-in and buy-out activity in – a record level – as both pension plans and insurers sought to close transactions ahead of the introduction of Solvency II on 1 January.
Finch continues: “Full buy-out pricing has become more challenging in 2016 as insurers get to grips with Solvency II. However pricing for pensioner buy-ins remains highly competitive with at least eight insurers actively quoting. Pensioner buy-ins continue to be a cost-effective way for pension plans to take down risk for carefully selected subsets of their liabilities. As a result, we expect buy-ins will play a key role over 2016 as part of a phased de-risking strategy while schemes continue to focus on closing pension deficits.”
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