On the go: Fewer multibillion bulk annuity deals are expected in 2020, although the number of smaller transactions is set to increase, according to research from Willis Towers Watson.
In its 2020 derisking report published on Tuesday, the consultancy firm stated that with bulk annuity volumes of £41bn in 2019 far exceeding predictions, the market is set to remain busy, with forecasts of transactions worth £30bn during the year.
The first half of this year will be particularly active, reflecting pent-up market demand from schemes unable to transact by the end of 2019, Willis Towers Watson stated.
Scheme funding levels have trended upwards due to positive asset returns alongside longevity gains, enabling plans to derisk earlier than expected.
According to the consultancy firm, this year will also bring a record high level of activity for the longevity swap market, which is predicted to exceed volumes of £25bn, with transactions heavily weighted towards schemes with white-collar members.
Opportunities for schemes with more blue-collar members will arise throughout the year, as reinsurers that have already won business seek to diversify and the others will target schemes that better suit their preferred member demographics, it added.
Shelly Beard, senior director at Willis Towers Watson, said: “The number of mega deals completed through 2019 shouldn’t be repeated in 2020, but there is certainly a lot of demand for deals across the market.
“The changes in pricing over the past few years do show the importance of choosing the right time to complete a transaction, rather than simply leaving it to chance. Knowing your target price, retaining price discipline and flexibility are all key to achieving the best deal possible in this new market environment.”
