The total value of deals in the UK bulk annuity market has reached a record £40 billion in 2019, according to a Reuters report.
The market, which has insurers taking on the risk of company pension schemes, has proven to be a big source of revenue for FTSE 100-listed insurers such as Aviva and Legal & General – and advisers expect the market to stay strong into the new year.
Read more: Legal & General in record bulk annuity deal
“The market seems to be running at full tilt,” Harry Harper, head of risk transfer at XPS Pensions Group, told Reuters. The firm predicted the market to ultimately reach £42 billion by the end of the year – a huge figure compared to the £25 billion in 2018. Other pension analysts, including Hyman Robertson and Mercer, also expect the bulk annuity market to go over £40 billion by the end of 2019.
What’s more, industry sources have told Reuters that a big £11 billion pound bulk annuity deal from the British Steel Pension Scheme (BSPS) may be on the horizon in 2020.
The activity has also started to attract the attention of reinsurers, with Reuters reporting that over 10 reinsurers have expressed interest in helping insurers share the risk – including Langhorne Re, which confirmed a pipeline of UK deals.