PensionsDec 8 2014

Partnership completes £205m bulk annuity transaction

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Partnership Assurance Group claims to have completed the UK’s largest medically underwritten bulk annuity transaction ever.

The £206m ‘top-slicing’ transaction will provide a bulk annuity for an unnamed multi-billion pound UK pension scheme.

The firm won the deal following a competitive selection process, but as the scheme’s members have not yet been informed of the specifics of the transaction, further details cannot be disclosed at this stage.

The ‘top slicing’ method allows trustees to insure pensioners with the largest liabilities, who represent a disproportionate risk concentration for the scheme.

Partnership stated that the pipeline of potential transactions has increased significantly this year, demonstrating the growing penetration of medically underwritten processes in the bulk annuity market.

Last month consultancy LCP’s annual report on the insurance de-risking market predicted that for the first time ever, the value of buy-ins and buy-outs written in 2014 is on track to pass £10bn and activity should outstrip this marker next year, due to the radical pension changes announced this year.

Legal and General’s recent results also revealed that while individual annuity sales fell 61 per cent in the nine months to September, bulk annuity sales increased 29 per cent in the third quarter of this year.

Steve Groves, Partnership’s chief executive, said that defined benefit transactions presented a market opportunity, but cautioned that the nature of these processes means quarterly performance will be lumpy.

“However, this £206m top-slicing transaction is a perfect example of how Partnership is able to bring the advantages of our unique intellectual property and underwriting expertise to trustees, corporates and pension scheme members within the growing UK defined benefit market.

“As we head into 2015, the pipeline of medically underwritten bulk annuities in the market remains strong.”

peter.walker@ft.com