The owner of Standard Life saw its BPA premiums grow year-on-year from £1.6bn during the first half of last year.
Phoenix Group reported £3.2bn in bulk purchase annuity (BPA) premiums during the first half of 2023.
Kunal Sood, managing director of defined benefit solutions and reinsurance at Standard Life, part of Phoenix Group, said the BPA market was seeing record levels of demand due to higher interest rates narrowing the funding gap of many defined benefit (DB) pension schemes.
He added: “This market is large and growing, and all signs are pointing to 2023 being a record-breaking year, with the total BPA market expected to reach more than £40bn in 2023, as schemes look to capitalise on their improved funding levels through insurance de-risking.”
He added it has been an exceptional period for Standard Life’s DB business. He said notable investment deals have included a £1.2bn buy-in with Mitchells & Butlers Pension Plan, a £1bn buy-in transaction with Chubb Pension Plan and Chubb Security Pension Fund, and a £80m buy-in with the MGM Assurance Staff Pension Plan.
He said: “With the predicted surge in bulk annuity demand now materialising, this is a market that continues to grow."
The BPA market is expected to total more than £40bn of business in 2023.
Sood added: “Standard Life is well-positioned to support in meeting this demand and ensure more members’ benefits are secured. Our participation within this 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.”
Sood added that the second half of the year looks positive with a strong pipeline of activity as the funding levels for many schemes allow them to position themselves for de-risking activity much earlier than anticipated.
He said: “With no end in sight, and as the industry starts looking ahead to 2024, for trustees and sponsors looking to de-risk, the priorities should remain on solid preparation, and flexibility, to ensure they are effectively navigating a constantly evolving market.”
