Late flurry takes 2010 buyout market over £8bn

A flurry of late activity saw £1.6 billion of derisking deals complete in the fourth quarter, taking deals in 2010 to £8.1bn, an increase of 8 per cent from 2009, according to a sector report from JLT Pension Capital Strategies.

Buyout prices were generally stable throughout 2010, a reflection of a more settled economic outlook, said JLT Pension Capital Strategies. It also said that during the last quarter there was evidence that some insurers have improved their pricing basis, carrying optimism of high business levels being written in early 2011, with this evidence of improvement carrying through into the beginning of this year.

Business was shared between a number of providers, which is evidence of a convergence in prices between the leading insurers and a healthy market.

The firm believes significant changes to prices in the short term appear unlikely, unless external influences dictate this, with insurers indicating that the impact of Solvency II has already been reflected in their prices.

Tiziana Perrella, head of buy-out services at JLT Pension Capital Strategies says: “A frantic fourth quarter ensured that 2010 was a big year for the buyout market.
“There remains a clear desire from sponsors for schemes to reduce risk, with buyouts being the ultimate aim.”