Standard Life writes £3.2bn BPA premiums in H1
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Standard Life says it has written £3.2bn in bulk purchase annuity premiums in the first half of this year, doubling its premiums year on year.
The subsidiary of Phoenix Group says it has continued to invest heavily in the BPA business - a market it entered in 2016 - which has helped it write £3.2bn in premiums during the first half of 2023, compared with £1.6bn in the first half of last year.
“Through the deals we have invested £195m of capital across 10 external transactions. This has driven strong year on year growth which forms a key part of the growth of Phoenix Group’s Open business,” said Kunal Sood, managing director of DB solutions and reinsurance at Standard Life.
In H2 last year, the insurer also wrote £3.2bn, according to consulting firm LCP. The £4.8bn total premiums for 2022 gave it a market share of 17%, down from 20% a year earlier, putting it in second place behind Legal & General among eight BPA providers, the consultancy found.
Deals completed in the first half of this year include a £1.2bn buy-in with the Mitchells & Butlers Pension Plan, a £1bn buy-in the with Chubb Pension Plan and the Chubb Security Pension Fund, and an £80m buy-in with the MGM Assurance Staff Pension Plan.
In H2 last year, the insurer also wrote £3.2bn, according to consulting firm LCP. The £4.8bn total premiums for 2022 gave it a market share of 17%, down from 20% a year earlier, putting it in second place behind Legal & General among eight BPA providers, the consultancy found.
Deals completed in the first half of this year include a £1.2bn buy-in with the Mitchells & Butlers Pension Plan, a £1bn buy-in the with Chubb Pension Plan and the Chubb Security Pension Fund, and an £80m buy-in with the MGM Assurance Staff Pension Plan.
Buy-ins and buyouts have become more affordable because of high interest rates narrowing the funding gap of many pension schemes. Sood expects total BPA premiums to reach more than £40bn in 2023 as a result, which would be a substantial increase from last year’s £28.1bn, and similar to 2019 levels of £43.8bn as recorded by LCP.
Sood said Standard Life’s participation in the growing BPA market “is consciously disciplined to ensure that our risks are well managed. We therefore continue to take a selective approach to deals, focused on delivering the right solutions for our clients.”
For the second half of the year, he said there is a strong pipeline of activity as pension funds are able to move to insurance sooner than anticipated, and recommended trustees and sponsors looking to derisk should make sure they are well prepared and flexible.
This year has seen BPA deals for the DB pension schemes of United Utilities, the new British Steel Pension Scheme, the Safeway Pension Scheme and the Thomas Cook Pension Plan among others.
What level of premiums do you expect to be written overall in 2023?
