Retirement earnings gross sales on the FTSE 250 life insurer Simply Group greater than doubled to £1.9bn within the first six months of the 12 months, as hovering gilt yields fuelled company pension offers and gross sales of particular person annuities.
Simply accomplished 35 company pension offers throughout a document first half, the corporate stated in a buying and selling replace launched on Tuesday. In such transactions, firms offload some or all of their pension liabilities, and the belongings backing them, to the insurer. That was up from 14 offers within the first half final 12 months and included its greatest to this point valued at £513mn.
David Richardson, chief govt, stated the outlined profit enterprise was going from “power to power” and its citation service, which provides costs for trustees on company pension offers, had rising demand.
Like larger friends equivalent to L&G, Simply has a document pipeline of such offers in what is predicted to be a document 12 months for the market. Specialists estimate that about 1,000 company pension schemes at the moment are properly funded sufficient to be offloaded to an insurer, after rising rates of interest closed the hole between their belongings and liabilities. The surge in dealmaking has prompted the Financial institution of England to name for moderation from insurers within the tempo of transactions.
Simply’s shares rose 6 per cent in morning buying and selling in London.
The altering financial atmosphere has additionally breathed life again into the marketplace for particular person annuities, whose charges replicate authorities bond yields. Years of low charges had suppressed demand for such merchandise.
Simply stated gross sales of particular person assured earnings merchandise had been now at their strongest for the reason that introduction of recent pension freedoms was introduced in 2014. They had been up 54 per cent 12 months on 12 months to £470mn. Greater charges have made them “considerably extra engaging to monetary advisers and prospects”, the insurer stated.
The group stated the upcoming introduction of the Monetary Conduct Authority’s new shopper responsibility guidelines — which require insurers and different monetary firms to exhibit how they’re offering good outcomes for patrons — would additional encourage gross sales of assured merchandise equivalent to annuities.
“The mix of upper rates of interest and new FCA guidelines ought to additional encourage advisers to re-examine the attractiveness of assured options, particularly for older purchasers,” stated Richardson.
Analysts at RBC Capital Markets referred to as the outcomes a “step-change in demand for each bulk and retail annuities” and upgraded its earnings forecasts.
Jefferies stated the top-line progress was “spectacular”, and Simply ought to “fairly simply obtain” its full-year steerage of 15 per cent progress in underlying working revenue.