UK’s DB buy-out boom set to continue with record year predicted
Consultants predict that excess insurer capacity, alongside fresh capital from three ownership changes in the first half of the year, will sustain intense competition and ensure buy-out record activity in 2026 (Andy Rain/EPA/Shutterstock)
UK life insurers say 2026 could see around $67bn of bulk annuity transactions, as improved scheme funding levels and a pipeline spanning small, mid-sized and £1bn-plus deals support expectations of a record year.
Consultants predict that excess insurer capacity, alongside fresh capital from three ownership changes in the first half of the year, will sustain intense competition and ensure pricing remains attractive for pension schemes looking to transact.
Speaking during XPS Group's bulk annuity market webcast, Emma Watkins, chief executive of Canada Life UK, backed estimates that total transaction volumes could reach £50bn this year.
"I think $67bn is probably spot on. We have a huge amount of resources across all the industry now supporting de-risking, so I no longer think insurer capacity, employee benefits consultancy capacity [or] trustee capacity is a limiting factor."
“We have a huge amount of resources across all the industry now supporting de-risking, so I no longer think insurer capacity, employee benefits consultancy capacity [or] trustee capacity is a limiting factor”
She noted that the first quarter of this year had been "relatively quiet", but the pipeline for the second and third quarters suggests "it is going to be a busy year".
The predictions come at a time when competition is intensifying, with several insurers changing ownership in moves expected to bring fresh capital and additional firepower to the bulk annuity market.
JAB Insurance, a US-based life insurer, is looking to acquire Utmost Life and Pensions, one of the UK life insurers active in the bulk annuity market, with completion anticipated in the first half of the year.
In March, Athora — a pan-European savings and retirement services group — bought Pension Insurance Corporation for around $7.7bn in an effort to enter the UK market.
Through Athora's strategic relationship with Apollo, PIC is expected to gain access to long-term growth capital and "asset origination capabilities especially in private investment-grade credit".
In April, Brookfield Wealth Solutions, which already owns Blumont Annuity Company UK, added Just Group to its portfolio of insurers through a $3.25bn transaction.
Peter Jennings, head of defined benefit sales at Just Group, said the injection of private capital from Brookfield's planned acquisition would help the company "compete for very large transactions".
However, he emphasised that the insurer will also continue to target small and medium-sized transactions, which will "always be a key area for us".
Canada Life UK plans to be strategic about market engagement depending on competition, resourcing and fit. Watkins noted that "if there was a smaller number of participants in the process", it would not rule out $20mn-27mn bulk annuity transactions. Equally, it is open to deals of more than $1.3bn.
"You have to be more strategic in terms of choosing which transactions you're going to participate in," she said.
Demand from small and mid-sized schemes
XPS's analysis indicates that more than 350 deals were concluded last year, with overall volumes estimated to be around $54bn. This compares with 300 deals completed in 2024 with a total value of $65bn.
MandateWire's Deal Flow 2025 report reflects a similar trend of rising deal numbers but lower overall transaction volumes, recording 106 UK deals worth $37.1bn in 2025 compared with 70 deals worth $39.2bn in 2024. The shift may reflect a greater willingness among larger schemes to run on, while improved funding levels have enabled smaller schemes to reach endgame solutions.
Mandeep Birkin, head of operations at XPS's risk settlement team, said fewer transactions worth $1.3bn or more were recorded last year, which impacted deal volumes.
"There was a huge amount of activity across the small and mid-size end of the market," she said.
While timing was one factor, some larger schemes took "more of a step back to consider running-on the surplus, especially where they have the scale to do so", she said. A shrinking pool of uninsured large schemes may also have contributed to lower volumes last year.
Commenting on the insurer acquisitions, Birkin said XPS "wouldn't be surprised to see a little bit more corporate activity this year".
She noted that pension fund trustees and sponsoring employers "should take comfort from the Prudential Regulation Authority [acquisition] approvals" and the fact that "insurers will still need to meet the relevant PRA and Financial Conduct Authority requirements to continue to write their annuity business".
"Of course, if preferred, trustees can also look to carry out further due diligence on the ownership of the insurer before entering into any buy-in contract, and they can do that with their covenant advisers," she added.