Partnership has secured a £206m medically underwritten bulk annuity deal with an unnamed pension scheme, the largest transaction of its type so far.
In this kind of bulk annuity deal a “top slice” of a defined benefit scheme’s members is insured where the membership is dominated by individuals with worse than average health. This makes it cheaper to insure, bringing down the price paid by the scheme’s corporate sponsors.
Partnership wrote the first medically underwritten bulk annuity in February 2013 and at a recent meeting told investors growing DB business and a product launch in the US would help reverse the damage wrought by the Budget pension reforms.
Chief executive Steve Groves says: “I am delighted to announce the completion of the UK’s largest medically underwritten bulk annuity transaction. Last month we described the significant market opportunity for DB transactions and I am pleased to see our strengthened proposition and efforts to develop the bulk underwritten market starting to deliver results.
“We have always cautioned that the nature of these processes means quarterly performance will be lumpy. However, this £206m top-slicing transaction is a perfect example of how Partnership is able to bring the advantages of our intellectual property and underwriting expertise to trustees, corporates and pension scheme members within the growing UK DB market.”
He adds the top-slicing approach can be applied across a range of scheme sizes, significantly increasingly the market Partnership can tap into.
Groves says: “As we head into 2015, the pipeline of medically underwritten bulk annuities in the market remains strong.”