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Insurer nerves dampen pension buyout market momentum
Q3 business placed 24% down on Q2, market reaches £6.3 billion year to date
Market outlook could be damaged by pricing and transactional uncertainties
London
NYSE: AOC

LONDON, 23 October 2008 – The insurance buyout market for defined benefit (DB) pension schemes is losing momentum as nervous insurers take action to counter the impact of the market turmoil according to research from Aon Consulting, a leading pension, benefits and HR consulting firm. Based on information provided directly from the leading insurers the findings show that, amongst other steps, insurers are for the time being starting to price more conservatively and have largely ceased providing guarantees on the assumptions underlying their quotations.

Although the market recorded a fourth successive strong quarter in Q3, the research shows that recently activity has slowed significantly, particularly since the collapse of Lehmans. There were 59 cases placed in the third quarter of 2008, compared with 84 in the previous quarter, with the total value of business placed (£2.1 billion) being the second highest on record, taking the year to date figure to £6.3 billion.  High profile cases in the third quarter included Cable & Wireless (the first deal of £1 billion plus), TI and Pensions Trust. As advisers to the trustees of the TI pension scheme, Aon placed a second tranche of pensioner liabilities during the quarter to the value of around £250m.
 

The full release is available in the attached PDF file.

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