The eight largest bulk annuity transactions this year represents over £25 billion of pension scheme risk transferred to the insurance market and sets 2019 up to become another record-breaking year for risk settlement, according to analysis by re/insurance broker Aon.
These transactions alone exceeds the previous annual record for total bulk annuity market volumes set in 2018 at £24.2 billion, which covered over 160 transactions.
Aon notes that further large transactions are likely to be announced before the end of the year and yet more are anticipated in what is expected to be a very busy start to 2020.
“2019 has seen a number of records broken in the bulk annuity market including the largest ever transaction, with telent’s £4.7 billion buyout, and the largest scheme to use buy-ins to manage risk to date, the National Grid UK Pension Scheme,” said Mike Edwards, partner at Aon.
“These transactions demonstrate the growing scope in the market for large pension schemes to implement bespoke de-risking solutions – a situation that is increasingly prompting others to follow suit.
“We have observed a significant shift in 2019 with the market for large transactions becoming increasingly dynamic, and – as we have always suggested – schemes needing to be prepared to respond ever more quickly if they are to capture the best commercial opportunities.”
Stephen Purves, partner at Aon, added, “Aon has been at the forefront of the recent surge in market demand – we have advised on £20 billion of completed buy-ins and buyouts so far in 2019.
“But we are also cognisant of the implications for the rest of the market; large transactions create obvious challenges by absorbing insurer capacity, so presenting deals to the insurers in the right way – often using streamlined approaches – will help smaller schemes compete for insurer attention in a busy marketplace.”