Royal London plans expansion into UK bulk annuity market after completing a deal with Royal Liver in November 2023 and Royal London Group pension scheme in January 2023.

In results published on Friday, the firms reported a pre-tax profit of £249m, up from £210m the previous year on the back of growth in new business, and assets under management at £60bn, up from £53bn.

Chair Kevin Parry said the firm had delivered a boost despite “another year of significant uncertainty”.

Royal London now said it is looking to push further into the buoyant bulk purchase annuities market, following a transaction with Royal Liver at the end of last year covering all the benefits of the scheme for all deferred pensioners and current pensions, removing the investment and longevity risk for the members of the scheme.

The firm also entered into a separate policy in January 2024 with the trustees of the Royal London Group pension scheme which partially covers the benefits of the fund.

According to an investor presentation that accompanied the results, the value of the transaction with Royal Liver was worth £246m covering 3,000 members, while the transaction with Royal London Group pension scheme was for £348m.

The annual report said: “Through these transactions we have extended our annuity capabilities in advance of an intended participation in the bulk purchase annuities market, focussed on providing a competitive solution to the trustees of defined benefit pension schemes.”

The news of Royal London entering the bulk annuity business follows M&G’s return to the market back in September 2023 by concluding a £331m buy-in transaction for one of its own pension funds – M&G Group Pension Scheme – as well as a £286m bulk annuity transaction for an external scheme, The Northern Bank Pension Scheme.

New players

At the beginning of the year, LCP predicted that two new players would enter bulk annuity market in 2024, with buy-in and buyout volumes on course to set another record.

This comes as the bulk purchase annuity market is expected to achieve new record volumes in both 2023 and 2024.

LCP estimates that 2023 will finish on circa £50bn of buy-ins/buyouts – exceeding the previous record of £43.8bn in 2019. And consultants expect that transactions in 2024 could reach as much as £80bn.

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Pamela is IPE's UK correspondent. Before joining IPE in May 2023, she spent five years writing about the insurance industry. During her career so far she won awards for Most Promising Newcomer in 2020 and Best Investigative Article in 2022 from the British Insurance Brokers Association, and was also highly commended at the WTW Media Awards for Insurance Features Journalist of The Year.View full Profile

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