According to Willis towers Watson, the annuity market which has been referred to as bulky will soon be growing rapidly to reach historical levels in 2019 with deals that are worth £30 billion. This high level will be achieved in a year.
This new level which will be attained in 2019 will break the records of 2018 which had the current volumes of £18.6 billion. In the year 2018, the record of 2014 was broken in which there was a record of £13.2 billion.
According to Professional Pensions, in 2018, the industry will witness an escalation in the number of mega deals which will have the worth of £1 billion.
And the longevity swaps will almost double when compared with the year 2018 thereby reaching £10 billion or above.
Willis Towers Watson expects retention of this level by the market for over the year though there is a potential pressure on the price because the insurers will be taking advantage of the demand and supply shift and the in-equilibrium caused because of it.
It further added that because of the potential of the cost savings in the future governance along with the combination of the strong equity markets and the falling longevity, the buyouts most probably tend to remain affordable.
Ian Aley, who is the head of the transaction team of Willis Towers Watson stated that for the bulk equity market the year 2018 was a record breaking one taking into consideration the bulk annuity market.
This included the four mega transactions which were worth £1 billion. The consultancy added that it is expecting this level of buoyancy in the activity to continue in the year 2019.
Alec also stated that in such a busy market, the pension schemes will have to be mindful so as to get the best traction.
Source: Professional Pensions, Financial Times
