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Risk Transfer TV - XPS in conversation with Peter Jennings from Just

Risk Transfer TV - XPS in conversation with Peter Jennings from Just

20 May 2020

XPS’s Sarah Collison talks to Peter Jennings at Just about bulk annuities and their approach to the market.

Sarah Collison: Welcome to another episode of XPS Risk Transfer TV. I'm Sarah Collison from the XPS Risk transfer team. I'm here today with Peter Jennings who is Business Development Manager from Just. Welcome.

Peter Jennings: Thank you for having me.

Sarah: Peter, what would you say your thoughts are on the current market situation?

Peter: Well, 2019 was clearly a historic year with over 40 billion pounds of liability being transferred from pension funds to insurers. Early indications are 2020 will be another huge year. Whether it tops 2019 will predominantly be dictated by how many of the mega deals end up transacting.

Sarah: You mentioned mega deals there. Do you have an ideal target market size of scheme?

Peter: Well, we aren't involved in many mega deals. Over the last few years our average has been around 50 million, which normally ranges between 5 million at a smaller end up to 250 or 300 million pounds that were higher. In terms of core, anything between 50 million to around 200 and they will be pensioner heavy transactions.

Sarah: Do you have a minimum deal size?

Peter: We don't have an explicit minimum size. However, small deals will be competing with much larger ones for the same resource and clearly it's a factor. But what that tends to mean is that small schemes need to be better prepared. They need to have the benefit spec legally signed off, we need to have the sponsor and the trustees aligned, that sort of thing. I would be pretty unpopular if I bought consistently small schemes that didn't go on to transact or were disproportionately high maintenance.

Sarah: Will you consider taking on schemes with deferred only membership?

Peter: It's not something we can do at the moment but it's something we're actively working on and we should have an update later in the year on that.

Sarah: Moving on to a more technical point now, with regards to equivalent benefits in respect to inequalities in GMP between men and women, does Just have a preferred method?

Peter: We do and the only method we can currently administer is D2. We are working with our third party administrators to be able to offer C2 at some time in the future.

Sarah: Pre-transaction medical underwriting was once a hot topic in the Bulk Anuity world. Is this now a thing of the past?

Peter: Well, we still believe it's the best way to get most value for a trustees but it's certainly much rarer now. We've updated our proposition so that we can offer underwriting after the deal has been signed, which then means we either share the benefits of the exercise 50/50 with the trustees or we build that into our initial premium. In both instances the premium is guaranteed not to go up, no matter the takeup rate of the underwriting or results of it.

Sarah: So finally, what are your thoughts on the XPS fixed file format for providing data?

Peter: Well, we recently worked together on a project that actually transacted and that came us on the XPS standardized format and we were able to turn around an indicative quote within two weeks from receiving a data, which is much quicker than ordinarily have been the case. Indeed, we might not have been able to quote at all had the data not been received in that way.

Sarah: That's great to hear how the fixed file format is meaning that schemes can receive their quotations more quickly. Thank you for coming in today and sharing your insightful commentary.

Peter: Thank you for having me.