Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

‘Calm before the storm’ for the pension scheme risk transfer market


Hymans Robertson LLP, the pensions actuarial consultancy, has predicted a buoyant pension scheme risk transfer market for the 4th quarter of 2010 and into 2011. In a report published last week Hymans Robertson they said they expect to see a quarter of FTSE 100 companies enter into a material pension scheme risk transfer deal by the end of 2012.

Risk transfer deals are more affordable for pension schemes thanks to improved market conditions but the still recent volatility means companies and trustees have a greater appetite to offload risks. As a result Hymans Robertson say ‘activity in the pension scheme de-risking market will continue to increase in the medium term’.

Pension scheme buy-ins and buy-outs have accounted for around £5 billion of liabilities in the past year. Longevity swaps have amounted to £7.1 billion since June 2009. Hymans Robertson says that 3rd quarter of 2010 is the ‘calm before the
storm for the pension scheme risk transfer market, with Q4 2010 risk transfers expected to be well in excess of £1billion’. They say there are several multi-billion longevity swaps being tendered currently and these expect to complete during the first half of 2011.

Overall the report (which can be downloaded here) paints a picture of a healthy and growing market with a lot of interest from potential participants.

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