The pension risk transfer (PRT) market in the UK exceeded £50bn 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 £190m, with over 158 transactions transacting in just the second half of the year.
“Last 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,” 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 £100m.
“It’s 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 £30m received quotations from multiple insurers in 2023,” 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.
“Firstly, there are over 15 buy-in transactions due to come to market over the next few months that are each between £1bn and £2bn. This group of large transactions alone add up to around £30bn and that’s before we take into account the material flow of buy-ins that are less than £1bn, along with mega transactions that are several £billion in size,” Mullins said.
“Secondly, 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 £3bn of completed transactions in the first two months of the year,” he added.