The medically underwritten bulk annuity (MUBA) market pulled in over £1bn in new business last year, according to figures released today.
The analysis by JLT Employee Benefits found that the value of new business in the MUBA market grew to £1.2bn in 2015, up from £540m in 2014.
Growth in the MUBA market has happened despite a small contraction in the wider bulk annuity business, with the total value written dropping to £12.4bn in 2015, down from £13.2bn in 2014. However, 2015's figure still represents the second-largest annual figure recorded by JLT.
"The year ending December 2015 was another fantastic year for bulk annuity business," remarked Tiziana Perrella, head of buyout at JLT Employee Benefits. "Although the final figure fell slightly short of the year before, we can see that this was chiefly the result of multiple mega deals in 2014.
"Similarly, the scale of bulk annuity business for the year ahead depends on the number of such deals which occur at the top end of the market. While we expect to see around £7.5bn of natural bulk annuity volume – that arising from small and mid-sized transactions – total market capacity of more than £15bn is entirely possible with the addition of two or three of these mega deals."
Notable deals of 2014 included the £3.6bn buy-in of ICI written by L&G and Prudential, the £2.5bn buy-out of TRW written by L&G and the £1.6bn buy-in of Total UK written by Pensions Insurance Corporation.
However, JLT also found signs of a trend towards smaller funds looking into de-risking opportunities.
Perrella remarked: "Despite the challenging economic climate making it more difficult for smaller schemes to get more than one quote from an insurer, opportunities persist for those that have done their homework in terms of data cleansing and formulation of a realistic price trigger. Going to market early and understanding which insurers to approach are also key in securing the best price."