Legal & General Group’s pension risk transfer (PRT) monitor has reported a strong start to 2022 for both UK and US markets, with the UK poised for second largest ever year.

The group’s global PRT businesses – Legal & General Retirement Institutional (LGRI) and Legal & General Retirement America (LGRA) – have released the latest edition of the Global PRT Monitor, which analyses industry trends and market outlooks in both markets.

“In the UK, we expect the volume in the first half of 2022 to be around £12bn [€14.2bn], which represents a c.50% increase compared to the first half of 2021,” the group stated.

Legal & General expects the overall volume in 2022 will reach £30-35bn and is likely to be the second largest year ever in the UK market. The volume could potentially exceed £35bn depending on the number of large transactions that complete this year, it added.

Chris DeMarco, managing director, pension risk transfer, at LGRI, said: “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.”

He added that insurers are working hard to meet the increased demand from pension schemes and he expects 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,” DeMarco noted.

In the US, the first half of the year is expected to be the strongest to date at approximately $18bn in total market volume. This is significantly higher than what is typically seen in H1, and nearly double the 2020 and 2021 H1 totals.

Both the first and second quarter this year were also record-breakers at $5.3bn and an estimated $13bn, respectively.

Growth in the US. market was driven, in part, by large transactions. Five transactions over $1bn came to market in the first half of the year and more are expected to close in H2, which could result in another significant year for the US market.

George Palms, president of LGRA, said: “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 $1bn and expect additional large transactions in the coming months.”

He added: “As we’ve seen in previous monitors, we anticipate plan terminations to continue to dominate the US market. 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.”

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