Comprehensive analysis of the buy-in market
Buy-in monitoring service – December 2020
17 Dec 2020
In this edition of our buy-in monitoring service, we share our usual pricing analysis as well as providing an insight into the latest buy-in activity.
This quarter's headlines include:
Pensioner buy-in pricing dips
As credit spreads continue to narrow back down, average pricing has deteriorated slightly compared with pricing seen at the mid-year point. See our “Buy-in pricing” section for more details.
Fluctuating insurer appetite continues
As 2020 draws to a close, buy-in pricing is significantly influenced by supply-side factors at the insurers. Final transaction volumes for 2020 will undoubtedly be lower than 2019, but the total number of transactions in 2020 is set to increase from the 153 transactions seen in 2019. Some insurers will be very comfortable with the business they have written over the year and their projected future pipeline, whilst some will be keen to finalise more transactions before the year end. Schemes that have not yet approached insurers will now be turning their attention to make sure they are first in the queue to approach the market early next year.
Appetites of different insurers vary significantly and have the potential to change quickly. Pension schemes need to look carefully at the quotes they receive and assess whether pricing is being negatively impacted by other activity in the market. Knowledge of what the market looks like through the eyes of different insurers is going to help trustees make the best decisions in periods of fluctuating insurer appetite.
See the bigger picture
Download our fourth annual risk transfer report, where we track the recent key changes in the market, with a particular focus on bulk annuities, and look at what these could mean for your defined benefit (DB) pensions scheme.