Bulk annuity transactions near £4.4bn in Q1

According to our latest research, UK insurers completed bulk annuity transactions totalling nearly £4.4bn in Quarter 1 of 2014.  The figure for the whole of 2013 was about £7.5bn, meaning business completed so far is already well over half of the 2013 figure.

Business for Q1 2014 was dominated by the two buy-ins transacted by the ICI Pension Fund – one for £3bn with Legal & General and the other for £600m with Prudential. Rothesay Life also completed three transactions worth a combined £259m.

The £3bn transaction between the ICI Pension Fund and Legal & General means that the record transaction size has now been broken twice in the last twelve months.  This demonstrates the appetite of some very large schemes and the capacity of the market to complete deals of this size.

However, schemes need to be aware that insurers have finite resources, especially if some very large transactions are in the pipeline.  Insurers will be less inclined to quote for schemes where affordability has not been properly assessed or there is little evidence of good preparation.