Pension Insurance Corporation (PIC) Group secured £3.5bn of defined benefit (DB) scheme liabilities throughout the first half of the year, although adjusted profits fell by nearly three-quarters.
The insurer completed five buy-in or buyout transactions in the six months to 30 June. Although the total volume was markedly down on last year, when £6bn of deals were completed in the first half, it is similar to the £3.3bn recorded in 2018.
In unaudited half-year results published today (10 September), the group reported a profit before tax of £306m, up from £89m in the same period last year. When adjusted by the company to reflect its core activities, however, the company reported an adjusted operating profit before tax of £187m, down by £442m from £629m, which it blamed on "a significant drop in the impact of changes in valuation assumptions compared with 2019", as well as lower levels of new business and reinsurance.
PIC said its solvency capital ratio had fallen slightly from 164% in June last year to 153% this year, while its market consistent embedded value rose by £750m to reach £4.6bn.
Meanwhile, financial investments increased by £6.8bn to £47.7bn. The insurer said it had experienced zero defaults within its investments, while only 0.2% of the portfolio moved from investment-grade to non-investment-grade rating.
Earlier this year, PIC Group's existing shareholders subscribed to £750m of new equity capital, with the final £300m tranche being drawn in September to support "strong new business flows" - while its subsidiary, PIC, successfully issued £300m of Tier 2 subordinated notes in May, when Fitch affirmed its insurer financial strength rating as A+ and long-term issuer default rating as A.
Chief executive Tracy Blackwell said: "Despite a volatile and uncertain backdrop, PIC has continued to win new business, manage our risks, strengthen our stakeholder relationships, and garner considerable support from both our shareholders and the debt markets during the first half.
"Our focus on PIC's purpose, to pay the pensions of our current and future policyholders, has helped us thrive in very difficult circumstances.
"Our policyholders have remained our absolute priority during this period and we have maintained a first-class service for them, alongside a very strong overall performance. I want to thank our employees for their efforts over the past few months, and look forward to a successful second half of the year."
PIC's deals this year include two buy-ins with the Co-operative Pension Scheme, covering liabilities worth £1bn and £400m, and a £1.6bn buy-in with the Merchant Navy Officers Pension Fund.
Across the market, £14.8bn of bulk annuities have been confirmed for 2020 to date.
Aviva Life & Pensions has concluded an £875m buy-in with its own staff pension scheme, following on from a similar transaction last year.
Just Group has completed a £74m pensioner buy-in with the UK pension scheme of a US-listed engineering business.
The Smiths Industries Pension Scheme has secured a £146m buy-in with Canada Life in its fourth bulk annuity and its sponsor’s tenth overall.
The Prudential Staff Pension Scheme has entered into a £3.7bn longevity swap with Pacific Life Re, insuring the longevity risk of over 20,000 pensioners.
The Baker Hughes (UK) Pension Plan has secured approximately £100m of liabilities through a buy-in with Just Group.