Royal London prepares to enter bulk annuity market

British pensions, investment and life insurance company Royal London said on Friday it was finalising preparations to enter within months the 'bulk annuity' or pensions insurance market, a fast-growing sector attracting more regulatory scrutiny.

Royal London reported that first half group operating profit rose to 144 million pounds ($183.36 million), up 13 per cent from 127 million in the same period last year.

The mutual said it continued to build its bulk annuities capabilities, and remains "on track to enter the wider market in the second half of the year" after completing two initial in-house transactions.

Insurers have cashed in on demand for bulk annuities, or insurance for defined benefit, or final salary pension schemes.

The life insurers take on the scheme's assets and guarantee payments to pensioners, removing pension scheme risk from company balance sheets, with funded reinsurance (fundedre) obtained from reinsurers based overseas to underpin such deals.

This has raised concerns at the BoE's Prudential Regulation Authority (PRA).

Britain's new Labour government has announced a review into pensions to see how more cash can be freed up to invest in the economy, with some industry leaders calling for higher minimum contributions into company schemes.

"The new Government has an opportunity to build on the success of automatic enrolment by creating a long-term plan that would have a positive impact on retirement outcomes while also generating investment to help finance growth," Royal London Group CEO Barry O'Dwyer said in a statement.