Re/insurance broker, Aon has reported that UK bulk annuity sales have reached a substantial £12.7 billion in the first half of 2020.
This amount has been reached despite challenging market conditions resulting from the COVID-19 outbreak. The market volatility saw a number of schemes reconsider market approaches or temporarily suspend transactions.
Throughout H1, there was a strong trend of ‘repeat buyers’ driving market volumes throughout the pandemic. It’s this type of customer who represent over half of the disclosed 2020 market.
Although a large number of repeat buyer transactions aren’t in the public domain, there’s a significance in the publicised deals to drive back volume to the annuity market.
This is a good portrayal of how establishing ways of integrating an annuity into your scheme’s operation makes it considerably easier to plan the next one. Schemes that have done this have been able to capture market opportunities and their working procedures have proved robust enough to deal with unpredictable markets and remote working.
Aon noted that many trust boards find that, while the first transaction requires plenty of time upfront to engage with contacts the sponsoring employee, decisions can quickly be jointly made with the employer in subsequent shares, even throughout times like the COVID-19, when companies have so many conflicting demands.
The repeat buyer trend has reinforced the necessity for schemes to plan ahead in order to move quickly and to be able to execute as opportunities arise. Repeat buyers develop nimble governance, enabling them to make swift and effective decisions.
In a busy market, particularly where resource has been stretched by COVID-19 challenges, insurers have looked for transaction certainty – so a track record of successful deals also helps schemes stand out.
Other schemes can bridge the gap in grabbing market attention. However, this requires due preparation and a clear proposition, as well as strong information on market activity formulated with an experienced advisory team.
