Buyout industry nervous as insurers choose gilts
Some bulk annuity providers are pricing deals assuming returns they ‘can’t achieve’ today
A move from insurers in UK pension buyouts to increase leveraged positions in gilts is raising concerns in the industry.
Some practitioners worry that insurers are pricing buyout deals based on an expectation that credit spreads will soon widen – a move that arguably could backfire if spreads fail to do so.
Many insurers are “offering buyout pricing that relies on future investment returns they can’t achieve today”, says Adolfo Aponte, managing director at Cardano.
“They’re having to take a view
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