UK roundup: KPMG LDI survey, Pension Insurance Corporation, PICA
The UK’s liability-driven investment (LDI) market continues to grow, with total hedged assets rising to more than £650bn (€830bn) as the number of mandates tops 1,000.
An annual survey conducted by consultancy KPMG showed the level of assets hedged rose by 27% from £517bn in last year’s survey, outstripping the £74bn and 16% rise seen between the 2013 and 2014 surveys.
However, of the £147bn of new assets in LDI strategies, only around £32bn could be attributed to new or extended mandates, with the remainder the product of market movements.
The number of new mandates increased by 25%, rising from 825 to 1,033, with market leader Legal & General Investment Management (LGIM) winning most (52).
F&C, with 49 new mandates, has now moved above BlackRock (41) into third place with a total of 153 mandates compared with the latter’s 151.
However, the US asset manager still outstrips its UK’s rival in terms of assets under management (AUM) by a wide margin.
In segregated mandates, LGIM leads the way, with more than £270bn in AUM, seeing an 18.6% rise from last year, with Insight Investment close on its heels with £159.1bn – a 22.1% rise.
BlackRock remains third, with £94.8bn, far ahead of Aviva (£14.8bn) and F&C (£11.3bn).
The top three account for 85% of the market – a continuing trend.
In pooled LDI mandates, the market is much tighter, with LGIM leading with £13.4bn but F&C in fourth with £5.7bn.
In other news, Pension Insurance Corporation (PIC) has reinsured £1.6bn of longevity risk with the Prudential Insurance Company of America (PICA).
PIC, a UK bulk annuity insurer, said the reinsurance contract covered its risks over 74 schemes it has written buy-ins and buyouts for in recent years.
In total, PIC has reinsured approximately 80% of its longevity risk, or roughly £9bn of its liabilities.
The UK bulk annuity market has been relatively quiet compared with 2014, a record year for transactions.
Since 2012, PIC has insured more than £6.3bn in pension liabilities but only £40m in the first three months of 2015.