A further two new entrants will enter the bulk annuity market in 2024, either through the acquisition of one of the existing nine bulk annuity providers or as new providers, LCP has predicted.

LCP’s forecast comes amid expectations that this year is on course to break the record for buy-in and buyout volumes.

The consultancy noted that rising activity in the market has attracted new capital providers looking for ways to participate in the growth of the UK buy-in and buyout space.

This included current UK insurers, overseas insurers and a range of investors expressing appetite to join the market.

LCP estimated that 2023 will finish on around £50bn of buy-in and buyout transactions, exceeding the record £43.8bn of deals in 2019.

It forecast that 2024 will see between £50bn and £65bn of buy-in and buyout deals, driven by a record number of transactions exceeding £1bn, with insurers reporting a strong pipeline of larger deals.

Despite the rise in the number of schemes seeking bulk annuity quotes in 2023, LCP noted that pricing had remained “highly attractive” during the year.

However, as we enter 2024, it said some insurers were reporting greater challenges in asset sourcing on bulk as the market settles into the higher interest rate environment, but attractive pricing opportunities should remain available to schemes with advisers who run an effective insurer process.

LCP also predicted that there would be a greater focus on run-on, superfunds and buyout alternatives in 2024, and that further sole insurer processes would take place this year.

“The buy-in market is on a rapid upward trajectory, and we’re expecting that to bring significant new investment to the market this year,” commented LCP partner, Charlie Finch.

“We are in discussions with six potential providers weighing up their options for entering the market which will be welcome news to the many pension scheme sponsors and trustees looking for a competitive market to provide a long-term, secure home for their members’ benefits.

“2024 looks on course to set new records driven by a growing wave of schemes seeking buy-in and buyouts. Pension schemes need to recognise that market dynamics are now fundamentally different, with insurers’ operational capacity and bandwidth being stretched, but we remain positive about the market’s ability to rise to this challenge.

“We’re confident that 2024 will bring attractive opportunities for schemes that run effective processes.”

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