Big Four

KPMG completes third Group Insure transaction for £33m of liabilities

KPMG has announced it has completed the third part of its Group Insure (GI) solution, helping two pension schemes (of £24m and £9m) secure a total of £33m in liabilities for December 2018.

GI helps smaller schemes group together to purchase insurance in order to gain access the wider insurance market. KPMG has managed over £90m across three GI structures providing insurance cover to seven schemes. With the insurance market in 2019 looking likely to exceed 2018 volumes, analysts expect the market to become increasingly difficult for smaller schemes to access competitive insurance pricing.

Research by the Pension Protection Fund’s Purple Book shows that the majority of schemes (80%) are small in size with less than 1,000 members, with an average asset size of around £35m. The estimated average premium for insurance transactions in 2018 was more than double that of the previous year, exceeding £200m.

James Staveley-Wadham, senior manager of pensions at KPMG, said: “We’re seeing strong demand in the bulk annuity market but this can have an impact on the smaller schemes which struggle to get insurers interested in quoting or quoting competitively.

“To prevent smaller schemes from being crowded out, our approach is to group schemes together with GI, coupled with an efficient process, which makes smaller schemes more attractive. The benefit of this approach has been demonstrated by our most recent £33m tranche.

“Looking ahead we expect demand to increase further as more and more defined benefit schemes become better funded and realise the benefits and efficiency of joining forces with other schemes, rather than facing headwinds by going alone. GI is an exciting opportunity for smaller schemes to obtain competitive insurer pricing and to secure members’ benefits.”

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