Record breaking 2018 bulk annuities to be surpassed in 2019

A record-breaking 2018 for bulk annuities is likely to be surpassed in 2019, according to Hymans Robertson report.

The value of deals is expected to soar past £20bn in 2018, with 100 per cent of independent trustees believing this is likely to be beaten in 2019.

According to the report, each of the eight active insurers are set for a record year of transactions, with Pension Insurance Company leading the way, transacting £5.01bn from 31 deals, followed by Aviva, who transacted £3.26bn from 56 deals.

Other insurers that have transacted over £1bn include, Legal and General (£2.4bn), Just Group (£1.4bn) and Scottish Widows (£1.35bn).

Hymans Roberston head of risk transfer, James Mullins, said: “2018 has seen a sea change in the bulk annuity market, becoming the first year when demand from pension schemes to complete buy-ins and buy-outs has outstripped supply from insurance companies.

“Insurers now have the luxury to be more selective about which pension schemes they focus their efforts on and to which they offer their best pricing. For the first time in the market’s history a queue for 2019 is already forming and the onus is now with pension schemes to stand out from the crowd.”

Mullins added that the March 2019 Brexit deadline has also led to a rush.

“Excellent buy-in pricing opportunities remain will remain in 2019. The shift in supply and demand, however, means that pension schemes will need to use a more intelligent approach to broking the bulk annuity market, both next year and beyond,” he said.

“Before approaching the market, it is now more important than ever for trustees to be well prepared and to have a clear understanding of insurance companies and how they prioritise their efforts.”

According to JLT’s October buyout watch, as much as £35bn of bulk annuity deals could have gone through by the end of the year.

A further £10-£20bn expected to be transferred to defined contribution schemes via individual member transfers, meaning around £40bn is expected to leave DB schemes by the end of the year.

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