Two “household name” insurers are gearing up to enter the bulk annuities market before the end of the year in order to revive their dwindling post-Budget business flows, delegates heard.
JLT head of buyouts Martyn Phillips told National Association of Pension Funds Annual Conference delegates a number of insurers had suffered a drop in sales of regular retail annuities following the pension freedoms announced in the Budget and were therefore “keen to dial up bulk annuities” business, while those not currently offering pension scheme insurance would seek to enter the market.
Phillips said he expected these new players would target the smaller end of the market where schemes were often overlooked by insurers seeking the largest deals.
He said: “Those who do not do them [bulk annuities] will not be able to make up the business so will enter the market. It will help small schemes attract the level of service they deserve.”
Phillips welcomed the development, saying new players in the market would be good for industry competition.
BESTrustees director Rachel Tranter said it was crucial for schemes to “be prepared” to transact in order to capitalise on opportunities when they appear.
She said: “There will be capital constraints in the market so you have to show insurers you are serious. That way you will get a better deal.”
According to Phillips, 2013 saw some £7.4bn of business written – the largest volume of bulk annuity deals since 2008 – and a further £8.9bn of longevity swap transactions.
The first half of 2014 saw more than £6bn of business and was expected to exceed £10bn by the end of the year, according to Phillips.
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