LONDON Feb 14 The market for transferring UK
company pension risks to insurers looks to have finally taken
off, judging by the mushrooming value of deals done in the final
quarter of 2007, pension advisory firm Aon Consulting said.
While the 75 deals done during the period was similar to the
number done in previous quarters, the 1.9 billion pounds ($3.74
billion) value of business placed was more than double that
placed in the preceding three quarters put together, the firm, a
unit of Aon Corp. AOC.N said on Thursday.
Big deals involving the pension liabilities of firms such as
Emap EMA.L, P&O, Lasmo and Weir Group (WEIR.L), were
responsible for the jump. That increased pace of business could
be maintained in 2008, indicated by the number and size of
pension schemes seeking quotations in the final quarter.
During that period, 432 schemes with a total value of nearly
41 billion pounds were quoted for by buyout insurers, said Aon.
In 2007, the market was dominated by two players,
Paternoster and Legal & General (LGEN.L) which each wrote
business worth over 1 billion pounds during the year. The next
player wrote only just over 100 million pounds, Aon said.
Firms have increasingly sought to close and offload the
liabilities in their defined-benefit pensions schemes as
volatile equity returns, tougher regulation and longer life
expectancy combined to make them a growing financial headache.
But Aon sought to put into context the jump in sales in the
much-hyped market, where players from Goldman Sachs (GS.N) and
Morgan Stanley (MS.N) to Aviva (AV.L) and Aegon (AEGN.AS) are
vying for a slice of a market with an overall value in excess of
1 trillion pounds.
"It is worth noting that 99.8% of defined benefit schemes
(by value) did not buy out in 2007," said Paul Belok a principal
at Aon Consulting.
"So far buyouts have tended to be for special cases -- for
example where there is a driver from corporate activity
requirements, strong funding levels, pressure from large
overseas parent companies."
(Reporting by Simon Challis; editing by Elaine Hardcastle)