The first half of 2023 has seen record-breaking volumes in the bulk-annuity market, with at least £20.2bn of buy-ins and buyouts over the first half the year, analysis by LCP has revealed.

This represents the highest H1 volumes ever, according to the group, which pointed out that although two insurers are yet to disclose their final H1 results, volumes in H1 2023 are on track to beat the £17.6bn record set in H1 2019 by 20 per cent.

This record-breaking first half also puts 2023 on track to break the overall record of £43.8bn of buy-ins/outs set in 2019, as LCP noted that volumes in the second half of the year have traditionally been larger than the first half.

The analysis showed that the market has been dominated by large £1bn+ transactions, with six £1bn+ transactions announced so far, alongside a strong flow of smaller and mid-sized deals.

LCP pointed out that the two biggest 2023 transactions to date have also set their own records, with RSA securing the largest ever buy-in with PIC, while the £2.7bn British Steel Pension Scheme transaction with Legal & General completed the insurance of this £7.5bn scheme, marking the largest full insurance of a UK pension scheme to date.

The trend towards larger transactions is set to continue, according to LCP, putting 2023 on track to eclipse the record of 10 transactions over £1bn set in 2019.

LCP found that insurers have continued to gear up to meet this higher pension scheme demand, with six of the eight insurers having already written volumes significantly in excess of £1bn in the first six months of 2023.

In particular, LCP found that PIC is leading in terms of market share, followed by Legal & General, Aviva and Standard Life.

It also pointed out that all eight active insurers are now writing full scheme deals, after Canada Life announced their first deal including non-pensioner members in July 2023, followed shortly by a full buy-in with Roadchef.

In addition to buy-ins and buyouts, 2023 has seen three longevity swaps announced, covering £8.3bn of liabilities, including a £5bn longevity swap between the BT Pension Scheme and Reinsurance Group of America announced in August.

Commenting on the findings, LCP partner, Imogen Cothay, stated: “Our report last October anticipated a big increase in demand for buy-ins/outs in 2023 and that is exactly what we have seen.

"The UK risk transfer market has never been so busy with record-breaking volumes of over £20bn in the first half of the year."

However, Cothay warned that this is creating capacity crunches across the market, with insurers forced to be selective on which transaction opportunities to pursue.

"We carried out a major expansion of our specialist advisory team last year, giving us capacity to manage multiple large transactions – such as the record-breaking deals for RSA and British Steel earlier this year," she stated.

“Schemes need to get a grip on their endgame strategies and ensure they have the right support to seize the opportunities in this market.”

LCP principal, Ruth Ward, added: “In the near-term, the spike in demand for buy-ins/outs, driven by rapid funding improvements for many schemes, is testing insurer capacities.

“Focussed and high-quality preparation and a clear journey plan have never been more important when approaching the market.”

However, industry experts have suggested that the regulatory direction of travel on superfunds could help ease a risk transfer capacity crunch, after The Pensions Regulator (TPR) shared updated guidance following a review.


Broadstone head of trustee services, Chris Rice, stated: : "Superfunds have long been the talk of the market and it appears that the government and regulator’s direction of travel is positive in this regard.

“For smaller schemes, the timing could well be perfect as insurers look to use their available resources in winning the larger, more commercially attractive schemes first in a buyer’s market.

"As demand continues to increase, if the capacity to transfer risk does not follow suit, smaller schemes could be left facing a capacity crunch, struggling to obtain timely and competitive quotations.

“The three gateway tests have eased the ability of a superfund transaction to take place. Schemes that can demonstrate that the market isn’t willing to do business with them can now consider the superfund route.

“We would like to see more clarity on the gateway tests so that trustees can feel confident that a superfund transfer is possible within the guidance. Superfund entry is, in any case, likely to provide a potential path to buyout and if this helps to ease the process while maintaining member security it has to be good news.”

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