A fall in the projected volume of jumbo transactions means that the second half of 2024 is expected to provide an attractive environment for medium-sized pension schemes considering a risk settlement deal, Isio has said.

The firm noted that last year was a strong year for deals, both in terms of the number of transactions and overall volumes.

However, it suggested that while 2024 is likely to be another record year, this may be only in terms of number of deals and not volumes, as the volume of jumbo transactions expected to close over the remainder of 2024 may not keep pace with 2023.

This, according to Isio, could increase insurer demand for deals with mid-sized schemes, creating an attractive pricing environment for those that are ready to move.

Indeed, Isio revealed that it has already advised 12 small and mid-sized pension schemes to enter into risk settlement transactions in the first five months of 2024, highlighting this as evidence of the "strong" demand on both sides of transactions.

And, despite the presence of some larger schemes in the market, which traditionally attract the most interest and drive overall market volume and headlines, Isio confirmed that the 12 schemes ranged in size, demonstrating the ability to obtain attractive pricing for even the smallest schemes.

Isio risk settlement director, Karen Gainsford, said: “The busy end to 2023 has continued into 2024. But the headlines too often conflate the number of transactions taking place with overall volumes, and while we are on course for a record year, the picture is more nuanced.

“The number of schemes over £1bn seeking bulk annuity transactions is now easily into double digits, with a number of these having the potential to surpass the largest bulk annuity transaction to date – £6.5bn between the RSA schemes and PIC in 2023.

"However, this means the fate of a handful of schemes will likely drive whether overall volumes continue to grow in 2024 and beyond.

“If some of the largest deals do not proceed, we would expect increased competition for mid-sized schemes later this year, particularly with new entrants seeking to establish themselves in the market.

"This could be great news for schemes who are close to affording insurance. With the right tailoring, schemes of all sizes can get insurer engagement and achieve a successful transaction.”

Adding to this, Isio insurance partner, Steve Robinson, stressed the need for scheme trustees and sponsors to consider upfront whether insurance is right for them under a range of scenarios, arguing that run-on may be the right answer for those who are fully aware and accepting of the downside risks.

“The insurance environment remains very competitive and the presence of new entrants is great news,” he added.

“Market pricing is heavily influenced by supply and demand so should some of the larger deals in the pipeline not transact there will be great opportunities for those schemes that are ready”.

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