Aon expects 2021 longevity swap activity to hit £15 billion

Aon expects 2021 longevity swap activity to hit £15 billion

Broking group Aon appears to be expecting another big longevity swap deal to complete before completion of the year, forecasting today that 2021 durability swap volumes will reach ₤ 15 billion.So far in 2021, weve counted ₤ 12.7 billion of UK focused pension scheme longevity swap plans, all of which are taped in our Deal Directory.
Just recently, Aons competing Mercer kept in mind the completion of ₤ 12 billion of pension fund durability swaps in the UK this year.
But today, Aon discussed in an upgrade on the UK pension risk transfer market that, while activity can be lumpy in longevity swaps, that doesnt indicate there isnt activity going on behind the scenes.
Tom Scott, Associate Partner at Aon Hewitt, the insurance coverage and reinsurance brokers brand name system that focuses on these pension deals, described.
“” It has actually likewise been a busy 12 months in the longevity swap market, with disclosed deals in 2021 expected to go beyond ₤ 15 billion,” Scott said.
Which recommends there is another transaction either in the market, or recently completed, that could emerge before year-end.
” As in previous years, the swap market continues to be controlled by a relatively small number of mega deals. This suggests that in between the announcement of these transactions, it might appear that the marketplace has actually gone quiet,” Scott continued.
Including that, “The reality could not be even more from that– there is currently significant behind-the-scenes activity ahead of the conclusion of the next wave of deals.”
Reinsurance capital schedule has actually been a crucial motorist of longevity risk transfer activity and in 2022 its anticipated capability could be a little more limited, specifically as international reinsurance companies have lots of opportunities to release their capital into solidifying P&C markets at this time.
By the end of the year, Aon thinks that ₤ 30 billion of bulk annuity offers for pensions will also have actually been completed, making it a busy year for the pension danger transfer market.
2019 saw around ₤ 12 billion of UK longevity swaps completed, while 2020 saw the overall rise considerably to ₤ 24.1 billion.

As a result, 2021 has been a little bit of a frustration, in regards to volumes maybe, with activity not having actually increased considering that the end of the first-half (as seen above).
However the lumpy nature of these huge offers suggests that activity levels can change considerably and if this one additional offer does complete prior to year-end, it will still make 2021 the second most active year in longevity swap market history.
Check out numerous historic durability swap and reinsurance transactions in our Longevity Risk Transfer Deal Directory.

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