UK - The pension fund buyout market will continue to grow rapidly as insurance companies invest the assets they take over more cleverly and increased competition forces prices down, according to Lane, Clark and Peacock (LCP).
Charlie Finch, partner, specialist buyout advisory team, LCP, said: "For those who haven't written any business yet, they will have to ride out the negativity this brings to succeed when pitching to clients.
"They may even have to go as far as discounting," Finch added.
The report showed £4.1bn of business had been realised in the six months to the end of March 2008. This was a seven fold increase on the previous six months.
LCP predicted the market would break the £10bn barrier in 2008 and the first FTSE company would carry out such a deal.
Clive Wellsteed, partner and head of the pension buyouts practice, LCP, said: "LCP sees the decision of whether to pass risk to an insurance company through buyout as simply a question of timing."
Wellsteed concluded: "It's not a question of if these schemes will buy out, but simply a question of when."
LCP said most buyouts had been carried out for funds whose sponsor remained solvent and there had been a significant rise in partial buyouts where companies had only removed a tranche of risk.
Global Pensions highlighted the spread of business within the industry in the 11 April weekly edition. Click here to see the story.
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