LV= eyes bulk annuity launch


LV= is planning to launch into the bulk annuity market next year as part of a move into defined benefit pensions, Money Marketing can reveal.

The mutual suffered with other annuity providers following the intro-duction of the pension reforms.

Annuity sales slumped from £242m to £146m, its 2015 first-half results show.

But the company is now eyeing a bulk annuity proposition that will allow DB schemes to offload risk to the insurer. It will focus on enhanced buy-ins, where schemes with members with less than average life expectancy can get better pricing.

LV= head of distribution Steve Lewis says: “We’re stepping tentatively into the bulk annuity market. It’s quite a complex area so we’re not charging in; we’re looking at the proposition. We’ve been doing our first test pricing to check on com-petitiveness and building procedures and services.

“We have the core product but we need to build the proposition around it. Bulk annuities are a very different proposition; you can easily have £50m deals so the pricing and actuarial work is very important. You don’t enter this market flippantly.

“If all the financial indicators are good, we will make more positive steps next year.”

Lewis ruled out underwriting buyouts, which are offered by some ins-urers and remove pension liabilities entirely off company balance sheets.

Partnership is the most established player in the enhanced bulk annuity market, having signed a  record £206m deal in December 2014.

In August, Money Marketing rev-ealed how LV= was planning to launch a DB pension transfer service in partnership with consultancy Hymans Robertson.