The UK bulk-purchase annuity (BPA) market has gone through a step change, with the transaction volume substantially increasing during 2023 to hit £50bn of transaction volume. Higher volumes are expected over the next 5-10 years, driven by the improved funding levels and more schemes becoming more transaction-ready. Such significant deal volume growth has attracted new entrants to participate in the market, both as BPA insurers or as reinsurers providing funded reinsurance services to the BPA players.
With many schemes accelerating their de-risking journey, funded re is increasingly used by BPA insurers, both as a balance sheet optimisation tool to support BPA volume while managing the required capital amount, and as a pricing enhancement to improve the competitiveness of their front-end BPA bids. There has also been growing demand for structural innovation, with BPA insurers facing increasing regulatory scrutiny on recapture risk and counterparty exposures.
While the media spotlight over the last two years has been focused on mega deals, it is also worth noting that many small to medium sized pension schemes are also getting close to the stage of buy-out, unlocking the opportunity for streamlined offers to be provided by both BPA insurers as well as funded reinsurance providers, in the format of pricing (price lock), process and pre-negotiated contracts.
The Gallagher Re Life & Health team are partnering up with Buck, a Gallagher company, to share their perspective on the latest dynamics of the UK Pension Risk Transfer market and the role of funded reinsurance. The Gallagher Re team will also share unique global perspective with operations across US and Asia funded reinsurance markets.
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