Tag Archives: Annuities

Buyouts more affordable but only for a handful of schemes

Buyouts have become more feasible as annuity pricing for non-pensioners has improved, but some experts say many schemes still have a long way to go before being able to afford a buyout or buy-in transaction.GettyImages-99978274.0

Research conducted by consultancy LCP shows that around 1m people had their defined benefit pension insured through a buy-in or buyout, as insurers started to find their feet following the introduction of Solvency II.

More recently, the Cancer Research UK Pension Scheme completed a £250m pensioner buy-in with Canada Life as part of the scheme’s plan to reduce risk, including an introduction last year to liability-driven investing.

Continue Reading “Buyouts more affordable but only for a handful of schemes” at Pensions Expert News

Are insurance rules making people work longer?

here has been plenty of controversy surrounding the EU’s impact on UK insurance laws in recent weeks. Last week we woman-at-desk-cryingrevealed that uninsured drivers are to get compensation under a new EU rule; and now a report has outlined some even more significant consequences of the EU’s regulation.

Annuities have, reportedly, become more expensive as a result of Solvency II – and that means that people are needing to work longer before they are able to retire.

The statement was made as part of a hearing at the Treasury Select Committee on the impact of Solvency II as the industry looks to relax some areas of the regime post-Brexit.

Continue Reading “Are insurance rules making people work longer?” at Insurance Business News


In UK, Aegon shifts focus from annuities to web-mediated advice

Aiming to free up capital from non-core businesses, Aegon announced the sale of £3 billion in annuity liabilities to Legal & General.aegonfc

The transaction, along with the recent sale of Aegon’s £6 billion UK annuity portfolio, completes the divestment of the insurer’s annuity portfolio, IPE.com reported.

In 2010, Aegon decided to start withdrawing from the UK annuity market, believing that annuities wouldn’t meet its long-term risk adjusted return requirements.

The divestment reduces Aegon’s exposure to longevity and credit risk and fits the company’s continued shift to capital-light businesses.

Continue Reading “In UK, Aegon shifts focus from annuities to web-mediated advice” at Retirement Income Journal

Legal & General’s overblown market sell-off presents buying opportunity

There’s a buying opportunity at UK listed assurance and savings group Legal & General thanks to market concerns that have pushed its share price lower.

The group had a strong year inlisa 2015, with divisional operating profit rising by about 15 per cent.

L&G, which is leveraged to savings growth in the UK, also upped dividends by 19 per cent.

But while the headline numbers were solid, investor focus is on new Solvency II capital requirements.

There has also been disquiet about the company’s exposure to “weak” sectors, such as resources, in the annuity bond portfolio.

Continue Reading “Legal & General’s overblown market sell-off presents buying opportunity” at Financial Review

Rothesay Life buys £6bn of Aegon’s UK annuity book as profits soar

Rothesay Life, the pension insurance and bulk annuity specialist, has taken on two thirds of Aegon’s UK annuity book, boosting its assets under management to £20 billion.

The UK company, which was launched by Goldman Sachs in 2007, has taken on £6 billion-worth of Aegon’s portfolio, covering 187,000 policyholders.afp_68b7cfd01bff4a0b3ccef3cd1ef826a62ea18d59-640x426

The deal is the third of its type completed by Rothesay and follows a transaction to reinsure £1.2 billion in annuities from Zurich Insurance in 2015.

Addy Loudiadis, chief executive of Rothesay, said in an April 11 statement: “The trend of multi-line insurers looking to reduce their exposure to annuities will continue and provide further opportunities for us to accumulate assets and grow the business.”

The Aegon deal was announced as Rothesay revealed results for 2015 calendar year that showed an increase in profits of 42%.

Continue Reading “Rothesay Life buys £6bn of Aegon’s UK annuity book as profits soar” at Financial News

Bulk annuity pricing ‘less predictable’ due to volatility and Solvency II

Short-term bulk annuity pricing has become less predictable due to volatile market conditions and insurers adjusting to Solvency II, according to Aon Hewitt.

The consultant’s bulk annuityUNPREDICTABLE1 market update for January 2016 highlighted an expected increase in the cost for bulk annuities covering members who had not yet retired.

However, material change was not expected in the best available pricing for pensioners as a result of Solvency II – the new EU-wide capital regime for insurers.

Aon Hewitt ‎risk settlement adviser Dominic Grimley pointed out many providers had already planned their market models in the medical underwriting market and that pricing had settled down accordingly, adding: “Pricing for some insurers may have gone up slightly but the best pricing is very similar to where it was last year and we’ve not seeing any shock results from the first auctions this year post-Solvency II.”

Continue Reading ” Bulk annuity pricing ‘less predictable’ due to volatility and Solvency II” at Professional Pensions

Annuity rates have more than halved since 1994

Moneyfacts, which started recording the data since 1994, said the reduction in value was driven by low gilts, uncertainty created by pension freedoms, andApple Halves preparations for the Solvency II directive, which went live earlier this month.

Solvency II has been in the pipeline for over a decade, but Richard Eagling, head of pensions at Moneyfacts, explained delays in the final set of rules and the approval of firms’ internal models, meant that most annuity providers “were not able to fully factor Solvency II requirements into their rates until the final months of the year”.

According to the study, rates “made the worst possible start to 2015”. January saw providers respond to all-time low 15-year gilt yields, leading to the biggest monthly fall that the firm had ever recorded.

Continue Reading “Annuity rates have more than halved since 1994” The Actuary

Announcement: Moody’s: Solvency II ratios will not always reflect economic capitalisation

Global Credit Research – 10 Dec 2015

Paris, December 10, 2015 — According to Moody’s Investors Service, reported Solvency II ratios will not always reflect economic capitalisation of insurers. In fact Solvency II ratios may underestimate or overestimate insurers’ actual economic capitalisation because of the challenges in calibrating all risks on a pure economicbroken-euro basis at a 99.5% confidence level and the impact of the transitional measures agreed to smooth Solvency II implementation. As a result, the emphasis that Moody’s will place on Solvency II ratios in its assessment of insurers’ capitalisation will vary, notably by category of insurer.

Moody’s report titled “European Insurance: Solvency II Ratios Will Not Always Reflect Economic Capitalisation” is now available on www.moodys.com. Moody’s subscribers can access this report via the link provided at the end of this press release.

In the Solvency II Directive, which comes into force on 1 January 2016, capital requirements are defined as the amount of resources needed to absorb all economic losses with a probability of 99.5%. “On the basis of this economic approach, we have evaluated that a 100% Solvency II ratio is consistent with a low Baa level of capitalisation and a 200% ratio is consistent with a low Aa level of capitalisation”, said Benjamin Serra, Moody’s Vice President and Senior Credit Officer. “However, the calibration process and transitional measures have partly taken the Solvency II ratios away from a pure economic view”, added Mr Serra.

Continue reading Announcement: Moody’s: Solvency II ratios will not always reflect economic capitalisation

New rules raise the bar as life insurers optimise risk models

London – Monday 26 October, 2015 – UK life insurers report major changes in how they are having to assess and measure longevity risk within Solvency II internal models, according to research by Towers Watson.

In its annual study of risk calibration methodologies*, which highjumpreceived responses from the majority of UK life insurers seeking internal model approval, Towers Watson found that six firms strengthened their longevity risk calibrations by at least 20%.

Tim Wilkins, a senior consultant at Towers Watson, said: “The approval process for Solvency II has been very painful for insurers and the survey results show some have had to make major changes to their models, but the next step for those who do get across the line in January 2016 will be just as critical as they begin to embed and apply their internal models.”

Continue reading New rules raise the bar as life insurers optimise risk models

UK company pension insurance deals seen totalling 10 billion pounds in 2015 – Aon Hewitt

Deals involving transferring the risk of British company defined benefit pension schemes to insurers are likely to total 10 billion pounds ($15.35 billion) this year, down on last year’s record 13 billion pounds, consultants Aon Hewitt said on Monday.3134096-British-Pounds-banknotes-and-coins-Stock-Photo

These “bulk annuity” deals are a good source of income for UK life insurers, particularly after government pensions reform has at least halved the sale of individual annuities.

For companies, the deals remove the headache of running the pension schemes.

Years of low interest rates mean many schemes are in deficit and these sometimes need to be filled by the company before the life insurer takes on the risk.

Continue Reading “UK company pension insurance deals seen totalling 10 billion pounds in 2015 – Aon Hewitt” at Reuters News