Global insurance and reinsurance brokerage, Aon, predicts that the risk settlement market could still reach £50 billion by the end of 2020.

The 2020 result for the risk settlement market, including both bulk annuities and longevity swaps, could make it a record year, despite the difficulties that have arisen from the COVID-19 pandemic.

Whilst Aon’s risk settlement team has seen fluctuating levels of market activity during the past nine months, it expects to see a late surge in deal activity in the final quarter of the year.

Mike Edwards, partner at Aon, said: “Over £25 billion of transactions took place in the first half of this year, across both the bulk annuity and longevity swap markets.

That’s clear evidence of the resilience of this market, of pension schemes’ need for these solutions and of the way that the market has developed in recent years.

“However, Q3 was busy for the market and we also know that significant insurer and reinsurer appetite remains for closing further transactions before the end of the year.

“Market timing has been a key theme throughout 2020 with very attractive pricing available to those schemes that have been ready to act. But some of the inevitable market uncertainty driven by the US election and Brexit negotiations will mean that schemes will need to take a robust approach to get transactions over the line.”

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