The bulk annuity market saw “significant” shifts in market dynamics in 2024, including the emergence of new entrants, increased capacity to meet demand, and evolving insurer priorities, DLA Piper has said.

The past year [2024] saw the arrival of Royal London and Utmost in the market and 94 per cent of respondents indicated that new entrants would be likely to have a minor to moderate impact over the coming year.

In last year’s survey, 63 per cent of respondents expected a meaningful new entrant to the bulk annuity market in 2024.

The research also found that concerns about an “unmanageable” 2024 had eased, with 73 per cent of insurers reporting a busy but sustainable workload. This level of demand is also expected to continue into 2025.

In addition to this, the research found market dynamics have shifted “significantly” with demand stabilisation and increased competition, particularly around pricing, driving a sellers' market where the trustee has stronger bargaining power.

There was also a demand for larger volumes of small scheme transactions over this year suggesting the changing focus of both established and new providers.

Indeed, half of insurers said they were open to quoting on schemes under £100m, while others were willing to engage if streamlined processes are in place. New entrants are expected to bring additional capacity to this space.

However, the insurers remained divided on the role of funded reinsurance and for those who use it, it remained a targeted tool but there has been no wholesale change in reinsurance strategies from the UK bulk annuity insurers because of the developing market for funded reinsurance. 

Three quarters (73 per cent) of respondents believe trustees should not be concerned about insurers’ use of funded reinsurance, but some advocated for greater engagement on its potential impacts.

Of the 27 per cent who indicated otherwise, the common response was that trustees should engage with insurers about their use of funded reinsurance to understand its impact.
DLA Piper said in its view this should help should ease any lingering anxieties about how these arrangements are managed.

All insurers considered that traditional buy-ins and buyouts with insurers remained the most attractive de-risking solution for schemes in the market.

The survey also highlighted key challenges for 2025 including shifting government policy, the proposed Pension Protection Fund consolidator, and lingering resource constraints.

Respondents said their forward priorities were to build stronger external relationships, address resource and people needs, and enhance internal infrastructure.

Commenting on the research, DLA Piper partner and head of pensions de-risking team, Amrit Mclean, said 2024 was a major year for the UK bulk annuity market, with the exit of Scottish Widows and the arrival of Royal London and Utmost.

He added that the market was "clearly thriving" but, importantly, in a sustainable way. 

“We expect 2025 to be an interesting year for the whole market and I imagine that next year's survey will paint yet another picture,” Mclean said.

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