Bulk annuity market reaches £12.7bn in H1 as 'return buyers' drive markets

UK bulk annuity sales reached a “substantial” £12.7bn in the first half of 2020, with 'repeat buyers' predominantly driving market volume, analysis by Aon has found.

Aon’s latest Risk Settlement UK Market Update revealed a “strong trend” of repeat buyers driving market volumes during the “challenging market conditions” stemming from the Covid-19 pandemic, with this subset representing over half of the disclosed 2020 market.

The firm also stated that this trend is continuing in deals being considered for this autumn.

It clarified that whilst a significant number of repeat buyer transactions are not in the public domain, even the publicised deals show significant activity, highlighting recent return buyers such as the Co-op, which has completed 4 deals this year, and MNOPF, which has completed six transactions since 2009.

Aon argued that the increase in repeat buyers has shown how establishing ways of integrating an annuity into your scheme’s operation can make it “considerably easier” to plan for the next one.

It noted that schemes that have done this are better able to capture market opportunities, whilst their working procedures have proved “robust” enough to deal with unpredictable markets and remote working.

In addition to this, it argued that repeat buyers often develop “nimble governance” enabling “swift and effective decisions”, stating that this trend has reinforced the necessity for schemes to plan ahead and be able to execute as opportunities arise.

The update emphasised that in a busy market, where resources have been further stretched by Covid-19 challenges, insurers have been forced to look for transaction certainty, noting that a track record of successive deals can also help schemes stand out in this way.

The firm also emphasised that whilst other schemes can “bridge the gap” in getting market attention, this would require "due preparation" and a “clear proposition”, in addition to strong information on market activity.

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