UK insurance deals

LONDON: Deals involving transferring the risk of British company defined benefit pension schemes to insurers are likely to total £10 billion ($15.35 billion) this year, down on last year’s record £13 billion, consultants Aon Hewitt said on Monday. 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. Aon Hewitt said in a report there had been £3.6 billion in bulk annuity deals in the second quarter, compared with only £800 million in the first quarter.