Insurers are focusing on large bulk annuity deals at the expense of smaller schemes, according to LCP.

The consultant has said that the number of buy-ins and buyouts under £100m have reduced by around 30 per cent over the last five years.

This is despite the value of transactions coming in at record levels in the first half of 2019, at £17.6bn, and 2019’s final total expected to reach £35bn.

LCP completed its 40th bulk annuity transaction this week through its streamlined buy-in and buyout service that uses pre-negotiated insurance contracts.

The firm has found that the service is particularly useful for smaller schemes that are looking to de-risk.

LCP believes that it will become normal practice for sub-£100m bulk annuity deals to operate through a streamlined process, pointing to the fact that some insurers are already asking for the streamlined approach to be adopted for transactions as large as £200m.

LCP partner, David Stewart, said that it was disappointing to see the number of transactions under £100m fall over the last five years, as the logic for buy-ins and buyouts is arguably stronger for smaller schemes who do not benefit from the scale of larger schemes.

“We are pleased to have been able to buck this trend having seen a huge rise in demand from smaller schemes to transact through our streamlined service,” he said.

“The number of transactions through the service has increased 50 per cent in the past five years.

“Streamlined services are rapidly becoming the norm for transactions under £100m.”

LCP has now completed £1bnn worth of small scheme buy-ins and buyouts.

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