Standard Life says market volatility has led to large BPA market shift

Insurer believes volatility has led to improved funding and higher sponsor appetite for deals

Jonathan Stapleton
clock • 2 min read
Kunal Sood is managing director of defined benefit (DB) solutions and reinsurance at Standard Life
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Kunal Sood is managing director of defined benefit (DB) solutions and reinsurance at Standard Life

Market volatility in the final quarter of last year has resulted in significant shifts in defined benefit endgame planning, Standard Life’s Kunal Sood says.

Sood - who was promoted to the role of managing director of defined benefit (DB) solutions and reinsurance at Standard Life last October - said the market had "shifted considerably" since the final quarter of the year with the volatility of markets putting a number of schemes in a better funding position than previously.

But he said, while the volatility at the end of last year had resulted in improved funding for some, it had also left some with an asset portfolio that wasn't quite perfect - partly because the issues around liability-driven investment had caused a strain on their liquid positions, leaving them with a higher-than-expected illiquid asset allocation.

Sood said the other big shift - again partly down to LDI-related issues last year - has been an increased push from sponsors to de-risk some of the larger schemes, those that might have previously adopted a DIY runoff type approach.

He said Standard Life's focus was not only to help as many of these schemes as possible on that journey but also to help them along the traditional journey to buyout as well - helping a little earlier on with their asset and derivative positions, which he said might now be slightly more complex than they were previously.

Sood said Standard Life continues to have conversation with the "full spectrum" of schemes.

In December, Phoenix Group announced its firm contracted £4.8bn of BPA premiums last year, down slightly from £5.6bn during 2021. The firm's transactions over the past 18 months include a £1.7bn buy-in with the Gallaher Defined Benefit Pension (DB) Scheme and a £1.8bn deal with the Imperial Tobacco Pension Fund.

Sood will be speaking on how a volatile market affected endgame planning at Professional Pensions' Endgame Summit 2023 to be held on 22 March 2023. To find out more and to register for the event, visit our website.

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