LCP marks 100th transaction through its streamlined buy-in service as these services help unlock record growth in small scheme transactions

With the recent announcement of Low and Bonar’s £50m buy-in with Just, LCP’s streamlined buy-in service, which is designed to give schemes under £200m access to more insurers, better pricing and better terms, has hit 100 transactions as activity in the sub-£100m market continues to drive strong market activity.

The LCP streamlined buy-in service was launched in 2011 and marked a key turning point in the buy-in market. This development, along with several competing services that followed later, has been a key factor in the rapid growth in transaction numbers. LCP estimates that there will be over 300 transactions this year – more than doubling over the past five years – with the growth driven almost entirely by smaller sub-£100m transactions. Over 80% of all transactions in the first half of 2024 were under £100m.

The growth has been led to date by two insurers, Just and Aviva, which between them wrote over 60% of all buy-ins in 2024. They have both developed their own streamlined processes to help deliver this growth which dovetails with adviser-led services. More recently PIC have also launched a streamlined process and new entrants have been targeting smaller schemes. So the smaller end of the market has been increasingly competitive.

At the core of LCP’s streamlined buy-in service is the simple idea of a streamlined selection process with enhanced pre-negotiated contracts that give smaller schemes access to pricing and terms normally available only to larger schemes. The service has now reached 100 transactions with £4.3bn transferred to insurers. The size of the transactions range from £2m to £220m with an average size of £43m. Seven different bulk annuity insurers have completed transactions through the service.

LCP are also warning smaller schemes to be careful when choosing the best route to market. Because the market is so busy, some schemes who are not using a streamlined buy-in service, have resorted to non-competitive sole insurer processes. This opens the potential for insurers to put forward “above market” pricing. It is important for schemes to have an adviser that has the necessary market presence to achieve an effective competitive broking process and who is able to give robust advice on market pricing levels so schemes do not pay over the odds.

David Stewart, Partner at LCP, commented: “I am delighted with the take-up by smaller schemes of our streamlined buy-in service, having now hit its 100th transaction with over £4bn transferred to insurers, and for having played its part in the rapid growth in the market.”

“Small DB schemes already make up the majority of bulk annuity deals by number – with buy-in transactions under £100m making up over 70% of total buy-in transactions in 2022 and 2023, and over 80% in H1 2024.”

“Insurers are happy quoting on a competitive basis through LCP’s streamlined service given it is ‘tried and tested’ with pre-agreed contracts. This results in better pricing and gives access to stronger legal terms that are normally only available to larger schemes.”