An unnamed UK-based asset manager has concluded a £111m full buy-in of its defined benefit scheme to insure the benefits of 466 pensioners and deferred members. A new report suggests 2024 saw £45bn of transactions, with a large number of small schemes completing buy-ins.

This latest deal took place with M&G, which said it completed it “in a compressed timeline”. The insuring entity is the Prudential Assurance Company, a wholly owned subsidiary of M&G.

“As trustees we are delighted with the policy secured with M&G, which provides certainty to the scheme members and the scheme sponsor on the financing of member benefits into the future,” said trustee chair Roger Mattingly, a professional trustee at Independent Governance Group.

Isio was the risk settlement adviser and investment consultant to the trustees, and Hymans the scheme actuary. Broadstone was the scheme administrator, while CMS gave legal advice to the trustees. Law firm Herbert Smith Freehills advised the sponsoring company, and Hogan Lovells provided legal advice to M&G.

Managing director of corporate risk solutions at M&G, Kerrigan Procter, said there had been strong alignment of interest between the sponsoring company, the trustees and M&G.

Procter added: “2025 is expected to be yet another strong year for BPA transactions as market conditions continue to prompt many schemes to seek solutions to manage their liabilities and secure their members’ benefits.”

A new report by consulting firm Hymans Robertson found that 2024 saw £45bn of transfers, including 10 worth more than £1bn, and suggests this pace is likely to continue at this level. 

“The key theme for this year has been the increased capability from insurers and alternative risk transfer providers,” said head of risk transfer Lara Desay. “We believe that buy-in volumes will remain, or exceed, the £40bn mark for at least the next five years.” 

Desay said large schemes have dominated the market with at least six insurers completing transactions greater than £1bn but added that “an unprecedented number of small schemes have also completed whole scheme buy-ins with increased automation leading to slicker and more succinct processes and systems”.   

M&G said it has written almost £1.5bn of new business since re-entering the bulk annuity market in September 2023, having been inactive between 2016 and 2022, including a new type of buy-in where the risk is held in a captive reinsurer in Guernsey. As this is capitalised by the sponsor, the sponsor participates in both the upside and downside of the buy-in. Hymans Robertson said it has advised a pension fund on a similar arrangement with another insurer. 
   

     

With three transactions, M&G has held only a 2% market share in the 12 months to the end of June 2024, according to Hymans, while running a team of 40 people. In 2023, M&G’s chief executive told analysts the company would be selective with BPA transactions. 
   

   

M&G is not the only firm to see an opportunity in the UK’s DB derisking. Last year, Royal London and Utmost entered the BPA market, while Utmost owners Brookfield have also sought regulatory approval for Blumont, which would bring the number of active insurers to 11.  

Do you expect further insurers to enter the BPA market?