Legal & General Group’s Global Pension Risk Transfer (PRT) businesses have released the latest edition of the Global PRT Monitor, which analyses industry trends and market outlooks in the UK and US.
According to the Monitor, both markets reported a strong start to 2022, with the first half of the year expected to be the strongest to date for the US at $18bn in total market volume.
This number is significantly higher than typical for the first half of the year, suggests the report, being almost double the 2020 and 2021 first half totals.
Both the first and second quarters of this year were also record-breakers, says Legal & General, at $5.3 billion and an estimated $13.0 billion, respectively.
George Palms, President, Legal & General Retirement America commented, “Last year was record-breaking for the US PRT market and we have seen even greater momentum carry through the first six months of 2022 – with the strongest H1 to date.”
“We’ve already seen a significant number of transactions over $1 billion and expect additional large transactions in the coming months. While it’s too early to tell exactly how large 2022 will be, we expect this year’s total market volume to be greater than last year – making 2022 another historical year in the market.”
Legal & General expect the UK volume in the first half of 2022 to be around £12bn, which represents a 50% increase compared to the first half of 2021.
The company expects the overall volume in 2022 will reach £30-35 billion and is likely to be the second largest year ever in the UK market.
The volume could potentially exceed £35 billion depending on the number of large transactions that complete this year, says the report.
Chris DeMarco, Managing Director, Pension Risk Transfer, Legal & General Retirement Institutional, added, “The PRT sector in the UK is yet again proving itself to be an exciting and valuable contributor to the national economy. Thanks to favourable market conditions pension scheme funding levels are improving and buyout affordability is increasing.”
“Insurers are working hard to meet the increased demand from pension schemes and we expect transaction volumes to continue to grow in future years.”
“Our message for pension schemes considering a buy-in or buyout transaction in this busy market is simple – schemes who engage insurers early, have flexible timeframes and have prepared thoroughly put themselves in the best position to secure a transaction which best meets their needs.”