Bulk annuity deals have hit a record high of £49.1bn across 226 transactions in 2023, surpassing the previous peak of £43.8bn in 2019, according to Aon’s UK Risk Settlement Market Update.
According to Aon’s UK Risk Settlement Market Update, this surge was driven by various factors including enhanced scheme funding levels which fuelled increased buy-in and buyout activity, while a record number of mega-deals exceeding £1bn in 2023 amounting to £29.7bn in total, including RSA’s £6.5bn transaction with PIC, also contributed.
The market also saw a rise in small-scheme transactions with 161 sub-£100m deals facilitated by insurers offering streamlined options with Aviva and Just accounting for 115 out of 161 deals.
Just’s transaction volume has increased in recent years, rising from 29 in 2021 to 56 in 2022 and 80 in 2023, particularly focusing on sub-£100m transactions. But L&G, traditionally active across all sizes, wrote fewer transactions in 2023 compared to 2022, accommodating only 22 sub-£100m deals alongside larger ones.
Furthermore, Aon’s Risk Settlement Group played a role in securing 40 per cent of the total 2023 volumes with £10bn secured in a single week.
The research highlights the industry’s speculations on the need for consolidation solutions to boost the annuity industry’s capacity and cites the PPF-run option that is currently under consideration.
It says: “This growth in capacity for both more deals and higher volumes follows speculation over the extent to which other consolidation solutions may be needed to augment annuity market capacity.
“PPF-run option is being considered, but subject to simplifying benefits so that only a small number of benefit designs need to be administered, and so not preserving entitlements in the same way as an insurance solution.”
