Reinsurance News

Aon outlines opportunities for sub £100m bulk annuity transactions

16th August 2022 - Author: Kane Wells

In a recent UK risk settlement bulletin, insurance and reinsurance broker Aon has outlined the opportunities for sub £100 million transactions within the industry.

The bulletin notes then insurers are more likely to attain a steady flow of business by competing in auction processes across a range of sizes, as focussing on larger transactions in isolation can lead to a lumpier flow of business.

Aon states that this is a real positive for smaller transactions, (typically considered sub £100m) as insurer competitiveness tends to be more deal-specific, so maximising insurer engagement is key to achieving the best outcome for schemes.

With an array of considerations for smaller transactions in the current marketplace, preparation remains key for insurers, says Aon, as the quality of data impacts both the work required by insurers’ pricing teams upfront to provide a quotation and the time required by their administration installation teams post-transaction.

For smaller transactions, the bulletin suggests focusing on progressing data cleanse work upfront where possible, and ensuring the best presentation of key data for consistent pricing and ease of insurer validation checks.

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Streamlined broking processes are a must, affirms Aon, as increased market demand has resulted in more insurer scrutiny over the broking process itself, with insurers seeking as much certainty as possible that a transaction will go ahead if pricing is acceptable, before agreeing to devote resource to provide a quotation.

A streamlined broking process is now a requirement from insurers for an increasingly large proportion of transactions, specifically smaller ones. Aon expects this trend to persist into the future.

Whilst flexibility is important for all transaction sizes, Aon says it’s a particular advantage for smaller transactions, given their size means insurers can more readily utilise short-term capacity to price these deals, especially if they are being run via a streamlined broking process.

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