The bulk annuity market in the UK reached a record £21.1bn worth of transactions in the first half of 2023, according to analysis by Aon.

The total value of transactions eclipsed the £17.5bn worth of deals completed in the first half of 2019.

Aon noted that the record was broken despite rising interest rates pushing pension valuations down in 2022/23, which meant insurers needed to secure more members to reach the same volume compared to 2021.

It forecast that 2023 as a whole would also break the bulk annuity market business record, surpassing the previous peak of £43.8bn in 2019.

According to its report, the higher volumes reflected the increased funding levels for many schemes, the availability of capital, a strong reinsurance market capacity, and actions by annuity providers to optimise the capital efficiency of their annuity operations.

Furthermore, Aon highlighted that H1 2023 marked the return of transactions worth £1bn or more, including the largest bulk annuity transaction on record: RSA’s £6.5bn deal with PIC.

The consultancy added that it expected this trend to continue in the second half of 2023.

“The strong pipeline of schemes seeking to secure all liabilities in the near future could create insurer resource constraints, particularly for smaller schemes,” Aon stated.

“The current market conditions make it essential for small schemes to have a clear and well-executed market strategy.”

Sub-£100m deals still dominated transactions by number, with 67 per cent of all transactions completed in H1 2023 being worth less than £100m.

Furthermore, the market has become dominated by full-scheme transactions, with only three of the 95 deals in H1 2023 being pensioner-only deals.

Just Group completed the most transactions by number with 35, and wrote over half of the sub-£100m deals, while PIC wrote the highest value of business, with £6.54bn, followed by Legal & General with £4.87bn.

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