Bulk annuity market 'repeat buyer' trend to ensure H2 boost
The bulk annuity market’s ‘repeat buyers’ will continue to drive market volumes through 2020 with cautious insurers on the hunt for “a track record of successful deals”, Aon says.
This comes as Aon estimated a total £12.7bn of buy-ins and buyouts were completed in the first half of the year - a number which is around one-third down on the same period during 2019.
But, while Aon said the economic impact of the pandemic had seen a number of schemes reconsider their market approaches or temporarily suspend transactions, the market's eight insurers have all continued to quote and insure this year.
The consultancy said that the repeat buyers of the industry have been able to develop "nimble governance enabling them to make swift and effective decisions" which puts them in favour with insurers in uncertain economies.
It added that with resources stretched by the pandemic, insurers were keen to see "transaction certainty".
"A track record of successful deals can help schemes stand out," the consultancy said. "Other schemes can bridge the gap in grabbing market attention too, however this requires due preparation and a clear proposition as well as strong information on market activity formulated with an experienced advisory team."
Pension Insurance Corporation Group secured £3.5bn of defined benefit scheme liabilities in H1 despite a profits plummet, while Just Group completed £460.3m of bulk annuity deals in the six months to 30 June.
Aviva concluded £3.1bn of new business in H1 compared to £1.3bn last year, and Rothesay Life at £0.8bn compared to £0.7bn, including its £610m deal with The Marathon Service (GB) Limited Pension and Life Assurance Scheme at the start of this month.
In recent months Legal & General has also completed a number of major transactions after The Hitachi UK Pension Scheme, The Siemens Benefits Scheme and the ICI Pension Fund agreed deals of £275m, £530m and £70m respectively.
"This illustrates how established ways of integrating an annuity into your scheme's operation makes it considerably easier to plan the next one," Aon said.
"Schemes that have done this have been able to capture market opportunities and their working procedures have proved robust enough to deal with unpredictable markets and remote working.
"Many trust board find that, while the first transaction requires plenty of time upfront to engage with contacts the sponsoring employee, decisions can quickly be jointly made with the employer in subsequent tranches - even at times like these when companies have so many conflicting demands on their time."
More on Risk Reduction
Overloaded bulk annuity market to kickstart superfunds
A burgeoning superfund market could be on the cards within three years as defined benefit (DB) scheme trustees and sponsors face myriad legislative, economic, and capacity issues, says Lane Clark & Peacock (LCP).
Bulk annuity market on course for second busiest year after £12.6bn first half
Around £12.6bn of buy-ins and buyouts were completed in the first half of 2020 despite the onset of the Covid-19 pandemic, according to Lane Clark & Peacock (LCP) analysis.
PIC reports £3.5bn of bulk annuities as adjusted profit plummets by 70%
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.
2020 may be a 'blip' for bulk annuity volumes
This year might prove to be a blip in the growth of the bulk annuity market despite volumes trending towards £25bn, according to Mercer.
Marathon Service scheme agrees £610m full buy-in with Rothesay Life
The Marathon Service (GB) Limited Pension and Life Assurance Scheme has completed a £610m full buy-in with Rothesay Life, covering the benefits of more than 1,400 members.
Most read
