Competition in the bulk purchase annuity (BPA) market reached a new high in 2024, with six insurers writing over £5bn in deals for the first time, analysis from LCP has revealed.

LCP revealed that a record 10 insurers completed transactions in 2024, with six insurers writing over £5bn each, up from five in 2023.

Further competition could be on the horizon, as LCP pointed out that Brookfield recently confirmed that its new UK insurer, Blumont, had received regulatory approval and is now participating in transactions.

In addition to this, it found that other recent new entrant insurers, M&G, Royal London and Utmost, have continued to build their presence, writing £1.5bn between them in 2024.

LCP suggested that the expansion of the superfund market is also offering schemes greater choice, with the December transfer by the Wates Pension Fund of its £210m scheme to Clara-Pensions representing the first superfund transfer of a scheme with a non-distressed sponsor.

“The pension risk transfer market is firing on all cylinders, with record levels of competition and choice for schemes of all shapes and sizes," LCP partner, Charlie Finch, said.

Indeed, more broadly, LCP's research showed that buy-in and buyout volumes for 2024 were the second highest on record at £47.8bn, only just short of 2023’s record-breaking year of £49.1bn.

According to LCP, this was driven by a record number of large transactions with 14 buy-ins/outs over £1bn in 2024, beating the previous record of 12 set in 2023.

In particular, the largest deal "by far" was by the NatWest Group Pension Fund, which secured £9.6bn with Rothesay over two transactions in 2024.

Together with £0.6bn with Rothesay in 2023, NatWest has insured just over £10bn to date; the largest volume of any UK pension scheme and narrowly ahead of the previous record set by the ICI Pension Fund.

LCP also noted that a record number of transactions were recorded in 2024, in line with previous research from Hymans Robertson, which showed that a total of 299 deals had been completed during the year.

According to LCP, the biggest growth segment was ‘micro’ sub-£10m schemes which saw a nearly 60 per cent year-on-year increase in transaction numbers, making up over 30 per cent of 2024 transactions.

Indeed, despite larger deals driving the total volumes up, LCP revealed that smaller schemes of less than £100m made up nearly 80 per cent of all transactions in 2024, up from around 70 per cent in 2023.

In addition to this, nine out of 10 insurers completed transactions in this segment, with Just (120 transactions) and Aviva (52 transactions) completing the most under £100m.

Despite a quiet year in 2024 with only two longevity swaps totalling £0.8bn, LCP found that longevity swaps are now seeing increased activity, as BT Pension Scheme’s last week announced £10bn of hedging.

LCP partner, Imogen Cothay, said: "Looking ahead, we’re seeing a continued focus from insurers with high levels of competition for transactions of all sizes.

"It is particularly pleasing to see insurers responding to the rapid growth in demand for smaller schemes transactions, and new entrant insurers increasing competition for this market segment resulting in favourable pricing for well-run processes.

"We’re also seeing continued innovation driving improvements in other aspects of insurers’ offerings, as pension schemes increasingly look to non-price factors such as the member experience to drive their insurer selection decisions.

"Whilst larger schemes are leading the way, key innovations developed on the £1bn+ deals we led last year are now being made available to smaller schemes.”

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