On the go: The first half of 2020 saw a near 20 per cent increase in the number of bulk annuity transactions under £100m, when compared with the same period last year, according to analysis from Aon.
The consultancy, which expects this trend to accelerate through the remainder of 2020, has identified several factors that contributed for favourable conditions for smaller transactions.
First, there were fewer jumbo transactions in the market compared with last year, which has meant insurers have had more capital and manpower to deploy across a wider spectrum of transactions, Aon stated.
Second, there was an increase in the use of streamlined auction processes for smaller transactions, which particularly helped during recent volatile market conditions. Finally, insurers have invested in technology and operational capacity at the smaller end of the market, to increase supply for smaller schemes looking to derisk, the company added.
According to Stephen Purves, partner at Aon, there has been a “misconception that smaller schemes struggle to access competitive pricing from insurers, so it is really pleasing to see them taking advantage of these market opportunities and transacting in the first half of 2020”.
“Attractive insurer pricing and increased insurer capacity for well-prepared schemes has completed the picture,” he said.
Mr Purves noted that looking ahead, “insurers are expecting this activity at the smaller end of the market to continue through to the end of the year”.
He added: “It’s clear that they are placing increased importance on good scheme preparation to maximise their interest and to ensure schemes are ready to trade when opportunities arise.”
