A look at the year-end 2025 results from selected UK pension risk transfer (PRT) firms highlights some clear trends. Following two standout years in 2023 and 2024, the market returned to a more historically typical pace in 2025, with activity levels easing but profitability staying solid and the outlook for 2026 remaining encouraging. The results also show that firms are facing greater new business competition and are increasingly turning to optimisation strategies—particularly proactive asset management—to enhance profitability.

This paper summarises key themes from selected UK PRT firms’ year-end 2025 results, focusing on new business volumes and capital strain, optimisation approaches and the outlook for the UK PRT market in 2026.

Before we dive into the key themes for the year, it is helpful to set the market context across swaps, gilts and spreads over 2025 (Figure 1). These movements feed through to PRT pricing, investment opportunity and capital strain, and help explain both the cooling in volumes from 2023–2024 highs and the increased focus on optimisation discussed later. Swap and gilt rates were relatively stable over 2025, with some easing at shorter durations. Gilt-swap spreads moved higher at the short end but lower at the long end (narrowing by around 20 basis points), while credit spreads were broadly flat during 2025 after two years of tightening; more recently, spreads have shown some widening, which market commentary has linked to elevated geopolitical and macro uncertainty.

New UK PRT business: Why 2025 was “a more typical year”

New business volumes

Across the UK PRT market, 2025 was viewed by some as “a more typical year,”¹ with overall activity easing from the exceptional levels seen in 2023–2024. Several insurers recorded year-on-year declines in volumes, largely reflecting deliberate decisions to protect deal economics in the face of narrow credit spreads and a competitive pricing environment.

There were, however, some notable exceptions. These fell into two groups: outperforming incumbents and newer or returning market participants. Legal & General bucked the broader trend, achieving record UK PRT volumes supported by major deals with Ford (£4.6 billion), BP (£1.6 billion) and NatWest (£1.1 billion). Meanwhile, newer entrant Royal London and returning participant M&G also reported record levels of new business.

These new business volume results are summarised in Figure 2.

New business strain

Several firms reported higher levels of Solvency UK new business strain in 2025, typically around 2%–3%, marking a change from the unusually low levels of about 1% seen in 2024. For instance, Just Group reported a strain of 2.7%, slightly above its 2.5% target, attributing the rise to tougher market competition and changes to business mix.

One clear exception was Legal & General, which has maintained a low new business strain of around 1% since 2024, supported by its capital-light, gilts-based investment approach. Aviva also noted its ability to continue writing new business at relatively low strain levels. We would expect that as and when gilt swap spreads reduce and credit spreads increase, credit exposure will be increased.

With higher new business strain appearing to be the new normal, firms may increasingly look for new sources of value to stay competitive. This could include further emphasis on capital-efficient, gilt-based investment strategies⁴ or exploring alternative asset classes (such as securitisations⁵) which, while offering potential benefits, come with their own challenges around structure and regulatory treatment.

Optimisation, optimisation and more optimisation: How to thrive in today’s UK PRT market

Profitability

Even though overall market volumes have eased, profitability across the sector has stayed strong, with several firms emphasising their focus on value rather than volume. Achieving this calls for continued discipline and a sharp focus on operational efficiency, value‑adding activities like investment management and targeted management actions.

Solvency ratios

A quick review of published solvency ratios for year-end 2025 reveals some clear themes across the UK PRT market. With interest rates and credit spreads broadly stable over the year, these factors appear to have had a relatively neutral effect on solvency positions.

Overall, two broad patterns emerged in the year-end 2025 disclosures: firms whose solvency ratios fell year on year (typically reflecting higher new business strain and other headwinds) and firms whose solvency ratios improved (often supported by strong capital generation, favourable experience and/or management actions). Figure 3 summarises the year-end 2024 and year-end 2025 solvency coverage ratios for selected UK PRT insurers.

Large, diversified writers such as Legal & General and Aviva highlighted robust solvency coverage and strong capital generation, driven mainly by their business mix, capital-light approaches, asset optimisation and profitable new business. By contrast, Pension Insurance Corporation linked its very strong solvency ratio to a combination of favourable experience and management actions, including longevity, asset and capital optimisation.

Solvency coverage ratios reduced at both Royal London and Just Group during 2025, reflecting the capital demands of active bulk annuity growth and other non-operating headwinds. Royal London reported a reduction in its solvency coverage ratio due to capital deployed into new PRT business and acquisitions and indicated this may continue to edge down in the near term, while Just Group cited new business strain, dividend payments, interest rate movements, property experience and strategic expenses as key factors behind a lower solvency coverage ratio.

Management actions

Across the UK PRT market, insurers are increasingly using management actions to enhance cash generation and capital efficiency while keeping assets backing annuity books closely matched to liabilities and without materially adding risk.

Standard Life, for example, is making active use of its asset management capabilities to deliver a steady stream of recurring management actions of around £500 million a year, focused on portfolio re-optimisation, capital improvements and fund simplification, so that many small, repeatable optimisations translate into a durable, long-term income stream.

Legal & General also highlights asset optimisation as a key profit driver, with its gilts-based approach supporting attractive returns on capital and future optimisation opportunities. Meanwhile, Pension Insurance Corporation emphasises the role of its privately sourced debt investments—such as UK infrastructure, housing and other long-term assets—in supporting competitive pricing for PRT transactions.

Funded reinsurance

Funded reinsurance has remained a useful tool for insurers managing capital strain on large deals, though it is increasingly under the Prudential Regulation Authority’s (PRA’s) spotlight. Year-end 2025 results show mixed approaches across UK PRT writers: Some scaled back significantly, while others ramped up usage. Legal & General, for example, increased its funded reinsurance premiums from £0.6 billion in 2024 to £2.2 billion in 2025, which helped keep new business strain low despite higher volumes. By contrast, Just Group completed no funded reinsurance deals in 2025, despite completing £1.1 billion of funded reinsurance deals in 2024 (albeit that had been to support a single large transaction). Standard Life noted that it had reviewed and updated its funded reinsurance strategy⁶ following the PRA’s Supervisory Statement 5/24 publication.⁷

UK PRT market outlook for 2026

Although the PRT market remained highly competitive throughout 2025, firms continue to report a positive outlook. Legal & General expects around £50 billion in UK market volumes for 2026 and is already progressing 10 large transactions scheduled for completion in the second half of the year.⁸ Pension Insurance Corporation also sees strong prospects ahead, forecasting between £400 billion and £600 billion of business over the next decade.⁹ At the same time, competition is set to intensify, with new private equity-backed entrants adding further pressure to the market. Overall, the market remains confident, with most UK PRT insurers signalling continued strength and resilience across the sector despite mounting competition.

Over 2026, UK PRT insurers are likely to stay focused on capital efficient investment strategies, balancing yield with tight regulatory and risk constraints. We expect continued emphasis on gilts and high-quality credit (often in capital-light structures) and selective use of funded reinsurance (and possibly sidecars). At the same time, gradual expansion into well-structured alternative assets, such as securitisations and private credit, will remain attractive where these assets work within matching adjustment rules. The industry will be watching closely for forthcoming consultations on funded reinsurance and sidecars (as an alternative mechanism for third-party capital to support large transactions), which could shape how these tools are used in practice over the coming years.

Looking across the wider economy, a few weeks after the Spring Budget on 3 March—when inflation was expected to keep easing—the outlook has become less certain. The ongoing tension in the Middle East is putting fresh pressure on inflation and shaping expectations for 2026. It’s too early to know whether this volatility will last, but credit spreads have clearly widened in recent weeks.

Appendix

References

¹ Aviva. (n.d.). Aviva plc 2025 results announcement. Retrieved 25 March 2026 from https://www.aviva.com/newsroom/news-releases/2026/03/full-year-2025-results-announcement/.

² Numbers are sourced from companies’ published accounts.

³ For Legal & General, UK (rather than global) PRT volumes are shown in Figure 2.

⁴ Investment strategies using gilts may also involve enhancing returns through repo financing. When using this approach, one key factor to watch is whether repo counterparties still have sufficient capacity available. With the rapid growth of these strategies in recent years, available capacity has likely tightened significantly.

⁵ Securitisations can present challenges for matching adjustment portfolios due to the bespoke nature of their underlying collateral, and, in some cases, the active trading associated with assets like collateralised loan obligations (CLOs). However, certain sub-classes, such as middle-market or private credit CLOs, may help reduce these challenges by offering more stable structures and less frequent trading activity.

⁶ Standard Life. (March 13, 2026). Standard Life plc Annual Report. Retrieved 25 March 2026 from https://library.standardlife.co.uk/annual-report-and-accounts-2025-spread.pdf.

⁷ Prudential Regulation Authority. (23 October 2025). Supervisory Statement 5/24 – Funded Reinsurance. Bank of England. Retrieved 25 March 2026 from https://www.bankofengland.co.uk/prudential-regulation/publication/2024/july/funded-reinsurance-implementation-approach.

⁸ Legal & General. (11 March 2026). 2025 full year results: 9% core EPS growth; strong strategic progress; £1.2bn share buyback. Retrieved 25 March 2026 from https://group.legalandgeneral.com/en/newsroom/press-releases/2025-full-year-results-9-core-eps-growth-strong-strategic-progress-1-2bn-share-buyback.

⁹ Pension Insurance Corporation. (16 March 2026). 2025 full year results announcement. Investegate. Retrieved 25 March 2026 from https://www.investegate.co.uk/announcement/rns/pension-insurance-corporation-plc--35cs/pension-insurance-corporation-group-2025-results/9474662.

Additional sources

Just Group. (February 26, 2026). 2025 Annual Report and Accounts. Retrieved 25 March 2026 from https://www.justgroupplc.com/~/media/Files/J/Just-Retirement-Corp/investor-docs/financial-reports-and-presentations/2026/just-group-annual-report-2025.pdf.

Legal & General. (March 11, 2026). 2025 Full Results Press Release. Retrieved 25 March 2026 from https://group.legalandgeneral.com/media/ajreexmv/2025-full-year-results-press-release-and-analyst-pack.pdf.

M&G. (12 March 2026). M&G plc full year 2025 results. Retrieved 25 March 2026 from https://group.mandg.com/investors/results-and-announcements/latest-results.

Royal London. (n.d.). Annual report and accounts 2025. Retrieved 25 March 2026 from https://www.royallondon.com/siteassets/site-docs/about-us/annual-reports/annual-report-and-accounts-2025-rl.pdf.

Standard Life. (16 March 2026). 2025 annual financial report. Investegate. Retrieved 25 March 2026 from https://www.investegate.co.uk/announcement/rns/standard-life-plc--sdlf/2025-annual-financial-report/9474661.