DB schemes
Risk transfer
Mercer's pension risk transfer team works with trustees and sponsors of DB schemes to help assess their own scheme's circumstances. We can advise on your strategic…
Risk transfer market in numbers
A summary of the defined benefit pension scheme risk transfer market
The 2021 pension risk transfer market – a tale of two halves
2021 was a year of two halves for the DB pension scheme risk transfer market. The first six months were dominated by longevity swaps and small to mid-sized bulk annuity transactions, followed by a surge in bulk annuity deals over the second half of the year with almost £20bn written from July to December 2021.
While fewer ‘jumbo’ deals of over £1bn meant overall bulk annuity deal volumes were down on the previous two years, we did see record volumes of bulk annuity deals below £1bn in size, 10% higher than any other year. In addition, significant numbers of smaller bulk annuity were written with almost 65% of all 2021 deals for £100m or under.
The four longevity swaps in 2021, totalled around £15bn, the third highest year on record.
A strong 2022 risk transfer market
The first half of 2022 saw £20bn of risk transfer deals across bulk annuities and longevity swaps. This included the highest ever number (78) of bulk annuity deals completed in the first half of a year (33% higher than 2021), totalling £12bn. Over half these deals were between £10m and £100m. Four longevity swaps totalling £8bn were transacted in the first six months of 2022.
Not all insurers have yet publicised their full year results, however with a number of deals over £1bn transacting in the second half of the year we expect total 2022 volumes of bulk annuities to reach £25-30bn.
The second half of 2022 saw a further two longevity swaps totalling £8.7bn, taking the total for the year to six transactions totalling £16.7bn.
Chart showing annual bulk annuity and longevity swap transaction volumes between 2006 and 2021. 2006 £2 billion of bulk annuity transactions, £0 longevity swaps. 2007 £3 billion of bulk annuity transactions, £0 longevity swaps. 2008 £8 billion of bulk annuity transactions, £0 longevity swaps. 2009 £4 billion of bulk annuity and £4 billion longevity swap transaction. 2010 £5 billion of bulk annuity and £3 billion longevity swap transaction. 2011 £5 billion of bulk annuity and £7 billion longevity swap transaction. 2012 £5 billion of bulk annuity and £2 billion longevity swap transaction. 2013 £8 billion of bulk annuity and £9 billion longevity swap transaction. 2014 £13 billion of bulk annuity and £24 billion longevity swap transaction. 2015 £12 billion of bulk annuity and £8 billion longevity swap transaction. 2016 £10 billion of bulk annuity and £3 billion longevity swap transaction. 2017 £12 billion of bulk annuity and £6 billion longevity swap transaction. 2018 £24 billion of bulk annuity and £4 billion longevity swap transaction. 2019 £44 billion of bulk annuity and £8 billion longevity swap transaction. 2020 £32 billion of bulk annuity and £24 billion longevity swap transaction. 2021 £9 billion of bulk annuity (with a further £18 billion expected) and £13 billion longevity swap transaction. 2020 was a record breaking year with total UK risk transfers of £56 billion, including a record volume of longevity swaps.
2021 risk transfer is expected to reach £40 billion, including over £10 billion of longevity swaps. 2021 has seen a late surge in bulk annuity transactions including the Mercer-led £2.2 billion Metal Box buyout, after a relatively quiet start to the year dominated by small to mid-sized deals.
Risk transfer market in numbers - Insurer Market Shares: 2019 - H2022
A pie chart which shows the insurer market share of premium for bulk annuity transactions between 2019 and the end of H1 2022. Aviva 16%, Canada Life 2%, Just 5%, L&G 24%, PIC 17%, Rothsay Life 24%, Scottish Widows 3% and Standard Life 10%.
A pie chart which shows insurer market share by number of deals between 2019 and the end of H1 2022. Aviva 30%, Canada Life 4%, Just 16%, L&G 26%, PIC 10%, Rothsay Life 8%, Scottish Widows 3% and Standard Life 4%.
Mercer’s role in the pension risk transfer market
The Mercer pension risk transfer team continues to play a significant role in advising trustees and sponsors on their bulk annuity transactions. Over the last three years, the Mercer Risk Transfer team have advised on...
£2.2bn
the largest bulk annuity transaction of 2021
£4.3bn
the largest bulk annuity transaction of 2022 across two deals
£30bn
total volume of bulk annuity transactions
>100
total number of bulk annuity transactions (c.25% of all transactions across market)
We saw a surge of bulk annuity transactions, with almost £20 billion written in six months, including the Mercer-led £2.2 billion Metal Box buyout.
Risk Transfer Partner
Contributor(s)
Andrew Ward
Ben Stone
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