United Kingdom

Aon says 2020 was a record-breaking year for UK risk settlement

The market exceeded £54 billion and is set to climb to new heights again in 2021

LONDON, 1 March 2021Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, has said that now all information on deals is available, it can confirm that the UK pension scheme risk settlement market hit a new record figure in 2020. Early indications are that 2021 will also be a huge year – and potentially another record one - for the UK risk settlement industry.

Martin Bird, senior partner and head of Aon’s Risk Settlement Group, said:

“Despite all the problems and a general lowering of expectations regarding deals, 2020 saw the UK pension scheme risk settlement market – bulk annuities plus longevity swaps – reach over £54 billion. This figure beats the record of £52 billion set the previous year and was achieved despite the initial dampening effect of the market having to cope with the pandemic.

“This result certainly proves the market’s resilience, as well as the real need for risk settlement by schemes and their increasing understanding of how to access the market. However, the market also changed with fewer jumbo deals than we saw in 2019, but a 50% increase in the transactions below £1 billion in size. That meant more small and mid-sized deals as well as increased numbers of pensioner buy-ins rather than full scheme buyouts. There was also a strong trend towards repeat buyer transactions, underlining that well-prepared schemes with nimble governance arrangements were particularly well placed to capture market opportunities.”

Martin Bird continued:

“In many ways, this is a sure sign of the market’s increasing maturity, of its understanding of how deals can be put together and of a significant improvement in streamlined transaction processes, which made them more attractive to insurers.

“Now in 2021, it seems certain that everything we have seen over the past year must have added to the drivers for pension schemes to seek risk settlement measures. The COVID-19 pandemic is potentially the largest combined economic and political shock to the UK since the immediate aftermath of the Second World War. In that context, it is not surprising that we are seeing huge early appetite from schemes, and our expectation is that 2021 could be another record-breaking year for the industry.”


Notes to editors

About Aon

Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.

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