British pension insurance deals totaled approximately £45 bn in 2024, with a similar outlook for 2025, according to LCP. The adviser expects buy-in volumes to remain strong, forecasting between £40 bn and £50 bn in deals for 2025.
This would mark the third consecutive year of high activity after £49.1 bn in transactions in 2023. LCP initially projected £49 bn in deals for 2024, though the market is likely to fall just short of that. Final figures will be confirmed after insurers release full-year results in March.
Transaction numbers have risen steadily, growing 17% annually between 2020 and 2023. In the first half of 2024, a record 133 buy-ins were completed. LCP estimates around 280 transactions for the full year, reflecting a 24% year-on-year growth rate.
According to BestWire, Aviva’s pension business contributed significantly to its growth, according to CEO Amanda Blanc. Speaking during a first-half earnings webcast, she highlighted the company’s success in this market.
“The growth rate has been driven in large part by the expansion in sub-£100 mn transactions,” LCP said.
These smaller transactions had a two-fold increase over 2020-2023 and made up over 80% of all transactions completed in the first half of 2024. This growth has been led to date by two insurers, Just and Aviva, which have the most established streamlined propositions
Just Group CEO David Richardson also emphasized pension-scheme derisking as a driver of economic growth. He noted that by derisking pension schemes, U.K. businesses can focus on expansion while invested assets contribute to productive finance.
New insurers have been entering the buy-in market over the last 18 months. M&G, Royal London, and Utmost have increased the number of active players to 10. LCP anticipates another new entrant in 2025, bringing the total to at least 11.
“We expect at least one further new insurer entrant in 2025 taking the market to a record 11-plus insurers,” LCP said.
Brookfield, a global investment firm, was reported last year as having plans to enter the U.K. market through a newly established insurance company, and we continue to have discussions with a range of potential entrants and investors.
LCP
Despite the high deal volumes and growing competition, 2024 buy-in pricing was the most favorable in years. LCP attributed this to increased competition among insurers and innovation in investment strategies. This trend is expected to continue into 2025, though financial markets remain a key risk factor.
“This will build on the updated guidance issued last year which now permits capital release to investors, in a way to similar to insurers,” said LCP, which expects the DB superfund market to begin expanding in 2025 “after a challenging first few years.”
The upcoming Pensions Bill 2025 is expected to strengthen regulations for the superfund market. According to LCP, updated guidance issued last year allows capital release to investors, similar to insurers. The firm expects the DB superfund market to expand in 2025 after facing early challenges.
