The U.K. bulk annuity market grew 58% to £958 million ($1.6 billion) in the third quarter in terms of transaction value, following four quarters of declines, according to Aon Consulting.
In the quarter ended Sept. 30, the number of transactions using bulk annuities rose 20% to 48 in the quarter, while the number of pre-transaction quotations rose 10% to 303.
The outlook for the market in the fourth quarter is bright, as “there are several large deals in the pipeline, some of which may well conclude before the end of the year,” Paul Belok, principal and actuary at Aon Consulting, said in a news release.
“Pricing remains attractive relative to scheme funding assumptions, particularly for (participants already in retirement),” Mr. Belok said. “This means that longevity and investment risks can often be removed for this group through annuity purchase without the need for additional funding from the employer.”
Bulk annuities allow U.K. pension fund trustees to offload benefit liabilities to insurers in what are known as buyouts (when an insurer buys all liabilities) and buy-ins (typically when liabilities for a portion of participants is bought out).