British pension insurance deals totaled £45 billion ($56.03 billion) in 2024, according to a report released Thursday by advisory firm LCP. The report forecasts deal volumes of £40 billion to £50

billion for 2025, with new players expected to enter the market.

Life insurers such as Aviva, Legal & General, and Phoenix have increasingly tapped into the lucrative bulk annuities market—insurance policies designed for corporate defined benefit (or final salary) pension schemes. These schemes allow companies to transfer pension liabilities off their balance sheets, reducing risk.

In 2023, the bulk annuity market reached a record £49 billion in deal volume, according to LCP data. This growing sector has recently seen the entry of insurers like Royal London and Utmost, the latter backed by private equity firm Oaktree Capital.

LCP predicts at least one additional insurer will join the market this year. While the firm did not identify the new entrant, private equity firm Brookfield was reported last year to be establishing an insurance company for this purpose. Brookfield has not yet responded to requests for comment.

LCP also noted discussions with various potential new entrants and investors in the bulk annuity market. Additionally, it expects the emergence of a new pension superfund provider in 2025. Pension superfunds serve as an alternative for schemes unable to afford bulk annuities. Currently, Clara-Pensions is the only superfund provider in operation.

However, some employers are opting to retain pension schemes, given that higher interest rates have shifted many schemes into surplus, industry sources indicate.

The Bank of England has expressed concerns over the risks associated with funded reinsurance—or FundedRe—a mechanism through which overseas players, sometimes backed by private equity, provide reinsurance for bulk annuity deals.

Adolfo Aponte, managing director at pensions adviser Cardano, noted that FundedRe currently accounts for about 10% of bulk annuity transactions. Industry experts warn that this share could increase as the market expands, raising concerns among regulators about counterparty risks in the event of a market crisis.

The bulk annuities market continues to grow, attracting new players and investment while raising regulatory challenges. With record-breaking volumes and evolving dynamics, the sector remains a focal point for insurers, investors, and policymakers alike.