Insurance Curator Pension buyout market heats up as UK corporates sell liabilities to insurers, raising questions about pricing assumptions
By [Reporter Name]
Who: UK corporate sponsors, trustees and life insurers including Legal & General, Pension Insurance Corporation (PIC), Aviva, Just Group and new entrants backed by private capital; What: a surge in pension buy-ins, buyouts and longevity-risk transfers as defined‑benefit (DB) schemes shift liabilities to insurers; When: activity accelerated through 2023–2025 and into 2026, with record transaction counts in 2024 and a busy 2025 pipeline; Where: principally the United Kingdom, with cross‑border capital flows and North American and European insurance groups entering the market; Why: improved scheme funding after rises in yields, abundant insurer capacity (and reinsurance), competitive pricing and trustee appetite for “de‑risking” — all coupled with fresh scrutiny about whether insurers’ longevity and mortality assumptions are sufficiently conservative. (pensionsage.com)
LONDON — The transfer of corporate pension liabilities into insurers has moved from episodic to structural, with bulk annuity (buy‑in/buyout) volumes and longevity hedging surging as trustees and sponsors seek certainty for members and employers. But the wave of dealmaking — and the private capital backing some new market entrants — has renewed debate among actuaries, advisers and regulators about the assumptions insurers use to price longevity risk and the possible consequences if those assumptions prove optimistic. (equiniti.com)
Market momentum and major transactions
Consultancy and market analyses show volumes reached near‑record levels in 2023 and remained elevated in 2024, while 2025 saw an unusual pattern of many transactions by number but somewhat lower aggregate premiums in the first half, followed by a flurry of large deals in the second half. Lane Clark & Peacock (LCP) and other market trackers recorded around £48bn of buy‑in/out volumes in 2024, second only to a record year in 2023; the number of transactions last year was the highest on record. (pensionsage.com)
Large-scale transactions and corporate programmes have punctuated the headlines. Legal & General announced a sequence of multi‑hundred‑million and multi‑billion deals in 2025 and 2026 including a combined £785 million buy‑in with Anglo American scheme tranches in March 2025 and a later multi‑billion transaction with Ford, which L&G said secured pensioner benefits for tens of thousands of members. PIC and other specialist pension insurers also completed very large transfers — Rolls‑Royce agreed a c.£4.3bn buy‑in with PIC in 2025 — while new or newly capitalised entrants such as Blumont (backed by Brookfield) and private capital purchasers of insurers have expanded capacity. (group.legalandgeneral.com)
That growth has attracted large strategic investors. In mid‑2025 Athora — a European insurer backed by Apollo Global Management and partners — agreed to acquire Pension Insurance Corporation for about £5.7 billion, citing PIC’s scale and specialist position in the UK pensions market. Brookfield’s acquisition of Just Group similarly underscored private capital’s appetite for predictable long‑duration liabilities. Industry executives say such buyers value the cashflow characteristics of annuity books and view the UK as a compelling market for long‑term investments. (pensioncorporation.com)
Why sponsors are selling — and why insurers are buying
Three structural drivers explain the recent flurry of deals, advisers say. First, rising market yields since 2022 materially reduced the present value of pensions, lifting many DB schemes toward surplus or improved funding levels and making buy‑out prices more affordable. Second, competition and new insurer capacity — from traditional life companies, specialist consolidators and private‑capital backed entrants — have sharpened pricing, especially for smaller schemes where templated, streamlined processes now exist. Third, trustees and sponsoring employers increasingly prioritise covenant relief and certainty: an insured buyout removes longevity, investment and governance risk from company balance sheets and trustee responsibilities. (equiniti.com)
“Helping schemes achieve their endgame objectives marks a strong start to another busy year in the pension risk transfer market,” Legal & General’s Andrew Kail said in a company release announcing buy‑ins in March 2025, reflecting how insurers characterise the business opportunity. (group.legalandgeneral.com)
Pricing assumptions under scrutiny
As flows accelerate, analysts and some insurers caution that the market’s attractiveness depends critically on the assumptions used to set prices — most importantly mortality (base rates and future improvement), discount rates and reinsurance costs. A tightening of those assumptions could raise the cost of buy‑outs materially. Advisory firm WTW and actuarial reviews highlight two components that commonly diverge: a scheme’s own longevity view and the reinsurers’ or insurers’ view of future mortality improvements. Reinsurer fees have been low in recent years, helping to compress hedging costs; but experts warn that cheap reinsurance can mask differences in underlying longevity assumptions. (wtwco.com)
J.P. Morgan’s 2025 industry study cited longevity as a key risk in pension risk transfer (PRT) deals and noted concern that “insurers’ pricing assumptions for PRT/longevity deals do not seem to adequately reflect the likelihood of life expectancy improvement,” particularly for portfolios with limited mortality risk exposure, according to market commentary summarising the bank’s research. That warning has sharpened focus on the tail risks of medical advances or longer‑than‑expected mortality improvements. (pensionpolicyinternational.com)
Actuaries describe pricing as a three‑part exercise: a base mortality table that captures current death rates for a scheme’s membership; a mortality‑improvement projection that determines how those rates change over decades; and margins — explicit or implicit — for uncertainty, expenses and capital. Shifts in any input can alter buy‑out quotes. The OECD, LCP and other analysts emphasise that mortality projection models and improvement rates remain subject to debate and should be tailored to scheme demographics rather than applied mechanically. (oecd.org)
Trustees, advisers and insurers give different weights to those inputs. Trustees typically work from scheme‑specific actuarial analyses and often test insurer pricing with tender processes; insurers build prices using broad population‑level datasets, reinsurance market views and capital considerations. That disconnect can produce surprising spreads between internal funding assumptions and the market price to transfer liabilities, a gap that is narrowing in some cases as trustees adopt insurer‑aligned measures when contemplating buy‑out. (equiniti.com)
Reinsurance, capital and regulatory backstops
Insurers reduce their exposure to longevity through reinsurance and capital management strategies. Reinsurers have increased capacity and competition in recent years, which has helped compress the cost of longevity hedges and supported attractive buyout pricing. WTW’s analysis showed reinsurer fees at historic lows in 2023–24 and argued that insurers and reinsurers can legitimately differ on longevity views — a factor that materially affects the perceived value of a hedge. (wtwco.com)
At the same time, regulators and ratings agencies are watching the rapid build‑out of exposure and the rising use of funded reinsurance — a structure that can move both assets and liabilities off an insurer’s balance sheet and thus bolster solvency ratios. The Prudential Regulation Authority (PRA) has stepped up scrutiny of funded reinsurance and cross‑border reinsurance counterparties, warning about concentration risk and potential underestimation of counterparty exposure. The PRA’s 2025 life‑insurer stress testing and other statements signalled caution while concluding that the market showed resilience under “severe but plausible” scenarios. Ratings agency S&P has forecast continued PRT growth but noted that strong capital buffers and prudent mortality assumptions are critical to limit downside rating risks. (liferisk.news)
“Funded reinsurance should remain a feature of the market, but regulatory scrutiny is likely to increase,” wrote commentators tracking the PRA’s pronouncements, echoing industry warnings that funding structures and counterparty choice matter for long‑dated risk. (liferisk.news)
Voices from the market
Industry leaders and advisers paint a mixed picture: they celebrate growth and innovation but emphasise prudent underwriting.
Charlie Finch, a partner at LCP, said the market is “firing on all cylinders” as competition expands, but he and others caution trustees to be ready. LCP’s analysis showed record numbers of transactions in 2024 and a large pipeline of deals continuing into 2025 and beyond, including both mega transactions and a boom in smaller, templated deals. (equiniti.com)
Lara Desay, head of risk transfer at Hymans Robertson, told Investment & Pensions Europe that insurers had written only a portion of the expected 2025 volumes by mid‑year and that while transaction numbers were high, total premium volume in early 2025 was muted — an outcome driven by the timing and size distribution of deals. She urged trustees to engage advisers early to lock in favourable terms. (ipe.com)
Tracy Blackwell, chief executive of PIC, framed consolidation as a vote of confidence: Athora’s agreement to acquire PIC in July 2025, she said, would expand PIC’s capacity to offer “best pricing across a larger number of pension risk transfer deals” and to invest more in long‑duration infrastructure that matches liability cashflows. PIC’s role in several large 2024–25 transactions has made it a focal point for debates about specialist capacity and private capital ownership. (pensioncorporation.com)
Risks and unanswered questions
Despite broadly healthy market metrics, several risk vectors warrant attention.
Longevity uncertainty. Even modest mis‑calibration of improvement rates can create material future gaps in insurer liabilities. Analysts note that while recent mortality experience (including pandemic years) has been mixed, longer‑term trends — and future medical breakthroughs — remain the largest unknown for pricing. The OECD and actuarial researchers urge a blend of statistical modelling and expert clinical judgement when projecting long‑term mortality. (oecd.org)
Concentration and counterparty risk. The growth in funded reinsurance, plus the rising market share of a few large insurers and newly scaled firms backed by private capital, raises questions about counterparty concentration and the resilience of the ecosystem if macro shocks depress asset values or trigger rating downgrades. The PRA has explicitly called this out and signalled continued oversight. (beaumont-capitalmarkets.co.uk)
Timing and surge risk. With many trustees watching market moves, small shifts in yields or insurer pricing can trigger waves of simultaneous demand for buyouts. That surge risk can push premiums higher temporarily or strain insurer capacity if multiple large schemes seek simultaneous completion. Market trackers observed that H1 2025 had many more transactions by number but fewer large premiums until H2 activity picked up. (actuarialpost.co.uk)
Possibility of adverse selection. Insurers note they prefer blocks of primarily pensioner benefits (known mortality profiles) to schemes with a large contingent of younger active members, where longevity exposures are more uncertain. Where advisers and trustees fail to align on the composition of transferred liabilities, pricing disputes or transaction delays can result. (wtwco.com)
Implications for trustees, corporates and policy
For trustees and sponsors, the market offers real options: from full buy‑out to phased buy‑ins, longevity swaps and superfund transfers. Advisers recommend scenario stress testing that uses insurer pricing sensitivities and varied mortality improvement paths before deciding transaction timing. Several firms offer streamlined sub‑£100m solutions that have opened the market to thousands of smaller schemes; for larger schemes, bespoke structuring and asset transfers remain common. (equiniti.com)
For insurers and their owners, PRT is attractive for matching long‑duration liabilities against a pool of assets and for earning margins in a low‑growth environment. But those returns depend on careful mortality modelling, reinsurance selection and capital planning. Ratings agencies and the PRA will continue to test industry resilience through stress scenarios that include mortality surprises and market dislocations. (muckrack.com)
For policymakers, the rapid transfer of pension liabilities to private insurers — including firms backed by private equity or alternative capital — raises questions about market structure, public‑interest oversight and the design of prudential safeguards for long‑dated liabilities. Debates over surplus extraction proposals and the funding code for public sector pensions illustrate how assumptions and regulatory choices can shift the balance between scheme members, employers and taxpayers. Parliamentary discussions in early 2026 about the Pension Schemes Bill and valuation benchmarks underscore the political salience of the issue. (hansard.parliament.uk)
Where the market may go from here
Most advisers and ratings houses expect PRT volumes to remain strong for the decade ahead as a large stock of DB liabilities continues to seek insurance homes; J.P. Morgan projected that PRT could approach $100 billion annually in the medium term if current trends hold, and consultancy forecasts put sizable additional longevity hedging on the horizon. But the pace and profitability of that shift will depend on whether insurers’ longevity pricing remains conservative enough to handle future improvements without imposing losses on shareholders or policyholders. (pensionpolicyinternational.com)
“The outlook for this year remains exceptionally positive and with a busy market our pipeline remains as strong as ever,” Legal & General’s institutional retirement chief said in March 2025, encapsulating both the optimism and the operational strain in the sector as insurers scale to meet demand. How pricing assumptions evolve — and how effectively regulators and the market align incentives to price longevity honestly — will determine whether that optimism is matched by sustainable returns and secure outcomes for pensions’ beneficiaries. (group.legalandgeneral.com)
Methodology and sources
This article draws on public filings and press releases from insurers and pension insurers (Legal & General, PIC, Aviva), market and consultancy reports from Lane Clark & Peacock (LCP), Aon, Willis Towers Watson (WTW), and Hymans Robertson, coverage and analysis from Financial Times, Investment & Pensions Europe, Pensions Age and specialist trade coverage, and regulatory commentary from the Prudential Regulation Authority and parliamentary records. Where specific quotations or data are cited, sources are attributed inline. (group.legalandgeneral.com)
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