The bulk annuity market could hit £30bn in 2018 as providers overcome the “missed opportunities” of 2017, Aon has said.

According to the firm’s Risk Settlement: UK Market Update for March, the market has not yet utilised the spare capacity for pensioner buy-ins and full scheme deals so far this year, but that it is still on course to match their £30bn prediction.

Yesterday, 14 March 2018, Rothesay Life acquired Prudential’s £12bn annuity portfolio, which covers circa 400,000 policyholders, in the largest transaction of its type in the UK, beating Rothesay Life’s £9.5bn back-book deal with Legal & General in 2016.

Despite this, Aon risk settlement group partner, John Baines, believes that it won’t change their predictions for 2018.

He said: “There will also have been other insurers in the market with an eye on this. In fact, we expect their appetite has only increased as a result of this deal. So while it is a clearly very significant deal we don’t believe there will be any fundamental change to the way the bulk annuity market acts during 2018 – we think it remains on target for at least £30bn, as we predicted in late 2017.”

Aon said that better pricing had been achieved through insurers using a wider set of income-bearing assets, strong competitive market pricing and a more stable regulatory environment.

The report said: “This delay to further market growth looks temporary, with a substantial number of large auctions already in progress in 2018. This has left insurers managing their workload by declining some auctions, favouring well-defined decision-making processes from established broking teams.”

Last month, Aon said that while the bulk annuity market is expected to experience record volumes in 2018, most deals are expected to complete in the last three quarters of the year.

Share Story: