Bulk annuity transfers conducted by pension schemes have exceeded £15bn in 2018 so far, JLT Employee Benefits has found.

According to JLT's latest Buyout Market Watch report, the uplift in bulk annuity activity in 2018 to date has been a result of trustees and sponsors taking advantage of favourable insurer pricing to tackle their liabilities.

Key deals concluded in the year include Rothesay Life's £12bn acquisition of part of Prudential's annuity book in Q1, while deals executed last year ranged from £100m - £900m, with no individual transaction exceeding £1bn.

The report showed that in addition to the Rothesay deal and M&S's £1.4bn buy-in with Aviva and Phoenix, there are many other potential £1bn plus transactions in the market. A £2bn longevity swap was also concluded by National Grid Electricity Group.

JLT noted that at present, insurer pricing enables an attractive entry point for schemes across the market, with improving funding levels and increased sponsor interest
encouraging trustee demand.

Moreover, demand for quotations in early 2018 has been increasingly high. As a result, insurers are pushing back delivery timescales for schemes that continue to use traditional broking processes and are being increasingly selective over which schemes they quote for.

While certain quotations are being delayed, innovation in the way that quotations are requested has reduced insurer quotation timescales by two months to five days in some cases, JLT found.

JLT's report also highlighted that the mid-sized market is also experiencing significant demand including a mix of Q1 2018 and late announced H2 2017 transactions. These include the Post Office's £450M buy-in with Rothesay Life, a buyout of five schemes by WPP with PIC, the Sea Containers £187m PPF buyout with Aviva, Kingfisher's £209m buy-in with PIC and a £170m buyout of Toshiba with Rothesay Life.


JLT Employee Benefits head of buyouts Harry Harper commented: “It’s encouraging to see new technology and innovation drastically shortening the process to obtain insurer prices...This is something that has never been seen before in the bulk annuity market. At the same time the ease with which prices can be monitored over a period of time is enabling schemes to get quotations they might otherwise not have been able to get and to be on the front foot and transact rapidly when pricing hits a sweet spot. Looking ahead, innovation will continue to prove key to improving market efficiency."

Share Story: