An analysis of the 2025 half-year results from selected UK bulk annuity providers reveals notable trends. New business volumes were lower compared to the previous year, but market sentiment suggests a recovery is likely in the second half of 2025.
Industry expectations are for total volumes in 2025 to fall short of 2024 levels, reflecting a normalisation after what many considered an exceptional year. Insurers are expected to prioritise margins, internal rate of return (IRR), and back-book optimisation to maintain competitiveness and deliver value to both customers and shareholders.
Significant market events
- 2 April 2025: US President Donald Trump announced Liberation Day tariffs,1 triggering initial market volatility and a broad sell-off, particularly impacting sectors like the automotive industry. A subsequent 90-day delay on most tariffs led to a strong market rebound, restoring investor confidence. Despite this, inflation and interest rates are likely to see elevated volatilities, reflecting continuing market concerns regarding trade and tariffs, along with high budget deficit and debt ratios for many economies.
- 3 July 2025: Pension Insurance Corporation (PIC) announced its acquisition by Athora Holding for approximately £5.7 billion, expected to complete in early 2026. Both companies are expected to continue to operate independently.
- 30 July 2025: Brookfield Wealth Solutions agreed to acquire Just Group, with completion pending final approvals later in 2025. It plans to merge Just Group with its pension risk transfer (PRT) insurer Blumont to form a single insurance group. The deal is anticipated to give Just Group access to Brookfield Asset Management’s origination and investment expertise, strengthening its balance sheet and supporting future growth. The terms of the acquisition value Just Group at approximately £2.4 billion.
New business volumes and strain
First-half new business volumes were down year-on-year, though insurers reported strong pipelines for the second half. We note a relative growth in smaller scheme transactions, in part driven by streamlined solutions for small and mid-sized schemes and the entry of new market players, which we discussed in more details in our most recent PRT hot topics2 white paper.
Most insurers maintained Solvency UK new business strain close to 1%, with Just Group reporting 1.1% (down from 1.5% in H1 2024) and Legal & General around 1%. Lower strain levels have been supported by capital-light investment strategies, such as gilt-based approaches, which also create future optimisation opportunities, and increasing investments in high-quality illiquid assets. One new entrant, Royal London, reported a slightly higher 2% new business strain. Meanwhile, M&G, while reporting lower new business strain for H1 2025, also announced an update on their with-profit BPA offering, expected to launch in early 2026 – a development we discussed in our most recent PRT hot topics white paper.
Back-book optimisation
We continue to see back-book optimisations across the market, in part due to higher interest rates and narrower public spreads. Larger back books allow insurers to benefit from tailored asset sourcing and origination, delivering higher long-term risk-adjusted returns. Notably, valuation discount rates used by bulk purchase annuity (BPA) insurers fell by around 0.5% in the first half of 2025. It will be interesting to see what levels will be achieved by year-end.
Looking forward for the rest of the year
Key upcoming events for the remainder of the year include the Autumn Budget Announcement on the 26th November; the semi-annual update to Effective Value Test assumptions on 30 September 2025,3 which will be of particular interest to insurers with equity release mortgages; and the highly anticipated release of the Prudential Regulation Authority’s (PRA’s) Life Insurance Stress Test (LIST) 2025 results in November.4
LIST 2025 includes three scenarios—one 'core' scenario and two 'exploratory' ones. The core scenario assesses the resilience of the life insurance sector and individual firms to a three-stage market stress. The exploratory scenarios include an asset concentration stress and a funded re-recapture scenario. A significant development in LIST 2025 is the disclosure of individual firms’ results for the core scenario, which PRA views as an indicator of firms’ resilience, enhancing education and market discipline. It will be interesting to see industry and market reactions to results publication and additional disclosures by participating firms.
Selected half-year results (as of 5 September 2025)
1 Liberation Day tariffs are a broad package of import duties announced by the US President Donald Trump on 2 April 2025, a date he called ‘Liberation Day.’
2 Booth, C., Crowson, J., Ford, M., & Ginghina, F. (25 July 2025). Pension risk transfer (PRT) hot topics. Milliman, Inc. Retrieved 2 September 2025 from https://uk.milliman.com/en-GB/insight/pension-risk-transfer-prt-hot-topics.
3 See the Bank of England’s Solvency II Effective Value Test. The Effective Value Test takes several inputs as set out in Supervisory Statement 3/17: Solvency II – Illiquid Unrated Assets. Two of these inputs are set by the PRA from time to time and make up the Effective Value Test parameters: the minimum deferment rate (updated twice a year, at end-March and end-September) and the volatility parameter (updated once a year, at end-September).
4 Bank of England. (11 June 2025). Life Insurance Stress Test (LIST) 2025: Objectives, design and planned disclosure, Slides 19–21. Prudential Regulation Authority. Retrieved 2 September 2025 from https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/publication/2025/list-webinar-june-2025.pdf.