New entrants in the UK bulk annuity market are focusing on smaller pension schemes, widening access to risk transfer options as life insurers prepare for another year of high transaction volumes.
Fitch Ratings projects that volumes will exceed £40 billion in 2025, consistent with recent years.
Royal London and Utmost entered the market in 2024, followed by Blumont Annuity in 2025. These firms bring capital and asset-management capabilities that support engagement with schemes that have not traditionally been the focus of large transactions. Their presence adds to the number of insurers available to pension scheme sponsors seeking to transfer liabilities.
At the same time, the UK government has proposed a policy allowing defined benefit schemes in surplus to return excess assets to sponsoring employers.
Fitch notes that this change could affect the near-term flow of annuity transactions but expects ongoing activity as many employers prioritise liability reduction.
Established insurers are adjusting by offering simplified transaction models aimed at smaller schemes, while continuing to engage in large-scale deals supported by capital reserves.
The market now includes providers with different approaches depending on scheme size, capacity, and investment strategy.
Despite new competition, entry into the bulk annuity space remains limited by regulatory requirements, long-term capital needs, and the specialist expertise involved in asset sourcing and actuarial risk assessment.
Reinsurers are also playing a larger role. InEvo Re, formed by Macquarie Asset Management, completed its first UK reinsurance agreement in the first quarter of 2025.
While Fitch expects funded reinsurance to continue supporting large transactions, it does not foresee this route accounting for more than 30% of annual premiums.
Insurers are expected to monitor their exposure to credit-focused reinsurers to manage concentration risk.
Regulatory developments remain in focus. The Prudential Regulation Authority’s 2025 Life Insurance Stress Test (LIST) will assess insurers’ resilience under adverse conditions.
In addition, the PRA has proposed removing the pre-approval requirement for use of the matching adjustment on qualifying assets. If adopted, this could give insurers more discretion in investment timing, though existing standards on risk governance and contingency planning will remain in place.
Insurers’ increasing use of illiquid assets such as private credit continues, raising concerns around transparency and valuation. Fitch expects insurers to maintain diversified portfolios in line with regulatory expectations.
How do you see these competitive and regulatory changes affecting the UK’s bulk annuity landscape? Share your view in the comments.
