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Thanks all for encouraging comments on the £30m deal. Thus spurred on, have looked at prospects for PA. and JRG in this market. Out of the exciting read that is pensions world, I’ve gleaned some bits to like from this page: http://www.pensionsworld.co.uk/pw/article/survey-ready-to-take-the-plunge-12330791 My summary: Overall bulk buy annuities market record year over £10bn expected in 2014 Their words: "Dominic Grimley of Aon Hewitt says: “We would expect, given the increasing maturity of schemes, that sufficiently attractive market opportunities will arise for the bulk annuity market to have a record year, potentially reaching the £10bn level for the first time in the UK.” [ ] Similarly, David Ellis of Mercer says: “There is substantial latent demand for transferring defined benefit pension obligations to insurers, across the UK pensions industry. Any improvement in the economy, therefore, is likely to accelerate the trend toward buyout, not deter it. Many sponsoring employers and trustees alike are keen not to miss the next window of opportunity for them in the financial markets and are making preparations to ensure that they are ready to take advantage quickly.” [ ] Advisers and insurers seem to agree that 2014 is set to be a record year, with increasing numbers of larger pension plans aiming at a transaction. Mercer predicts that at least £10bn of bulk annuity business will be transacted in 2014 in the UK, spread over more than 200 transactions. Legal & General’s Tom Ground suggests that although it is “difficult to predict” how much business will be written in 2014, “if all of the schemes that we are aware of that are considering buyins and buyouts achieve their objectives, this will be a record year”. "

Nice find, thanks for sharing. Especially useful to know the 80% take up rate from the Swiss experience.

BBC Breakfast had Hargreaves Lansdown's pensions expert, Tom McPhail, explaining the pension changes and saying that along with the flexibility, it will still often be the best thing to do to take an annuity to be sure of not running out of money in old age. PA. current price looks to me to assume no more new business at all. Whereas, not only is there still some scope for individual annuities, more importantly that's not the only thing PA. do. Eg They're in the growing bulk annuity market covering occupational schemes and yesterday' announced they have won a £30m bulk annuity deal. You can check it on their investors' site where they mention the other markets they're in too. ...http://www.partnership-group.com/media/news/company/2014/partnership-sign-buy-in-deal.aspx

Cops, a link is on the open group called The Annuity Group in LinkedIn in a comment to Henry Tapper's last blog post this pm. Possibly a handy place to go anyway if the debate's interesting to you.

Yes, Dan, entirely agree. The "rip-off" idea is more perception than reality, with many not realising the falling income levels available are due to increasing longevity and amazingly low gilt yields currently, which insurers are forced legally to invest in to back their annuity obligations. Low gilt yields are of course down to the economy and government policy, not insurers. Though not having generally covered themselves in glory in some other notable areas, not surprising many assume it's down to insurer greed. I too am interested in the likely numbers that will be taken out, as you know. Thanks for your helpful stab at a drop off rate on Monday. Have unearthed a load of data to pull together a more sensible estimate than my first guess, so will let you know what I come up with. But in the course of researching, I found a worthy paper which included a handy section showing exactly how annuities are not a rip off, but an insurance against living too long. They showed the difference for a man retiring at 65 and taking the same level of increasing income from an annuity compared to income drawdown, assuming the latter’s investment returns average either 3%pa or 6% pa. Under income drawdown the money had run out at ages 82 and 87 respectively.

Thx! Express one good too: http://www.express.co.uk/finance/personalfinance/466871/An-annuity-might-still-be-best-Buying-a-regular-income-is-the-most-secure-option Most helpful bit to PA. (and JRG) I think is in the middle of the article: "If you outlive your pension pot, you may spend your final years struggling on the State pension. If you do buy an annuity, it is vital you shop around for the best rate and not just accept the offer from your pension company. If you are living an unhealthy lifestyle, are overweight or drink or smoke heavily, then you should look for an enhanced life annuity that pays you a higher income because your life expectancy is shorter. Anyone with serious illnesses should also consider this as it could boost their income by 5 to 40 per cent." This is the part of the market (enhanced annuities) where PA. and JRG are neck and neck in leading the market.

32% upside is arguable from 134.5. Mcap is £675m, whereas embedded value is £892m. So with no new business that gives a price of around 177. But there won’t be no new business. The annuity market from direct contribution pensions will certainly reduce, but not as far as some have predicted and the specialist innovators stand to grab a bigger share of that, especially as this move promises to make people more actively consider their best options. And that’s not all JRG do. Rodney Cook says it best in the Telegraph piece(http://uk.finance.yahoo.com/news/annuities-market-surivive-osbornes-bombshell-213048331.html): “we have had a strong entry into the defined benefit small scheme market, which is looking good, a potential market of £1bn a year, and the Chancellor made clear he’s not aiming to impact that scheme,” says Cook, whose business specialises in individuals with shorter life expectancy than the norm. “We’re also one of the largest providers of equity release mortgages, and people releasing equity to enhance incomes in their retirement might see a further increase following the proposals.” So the question I’m looking at is how much above 177 should the price be?

1. £10.8m + £0.63m were showing as buys at 140p on HL Friday after 16:30. Just thought worth a mention here! (1st one =3%, but haven’t seen a disclosure yet) Plus last week £74.6k bought at 155p by the wife of non-exec director Les Owen, and £100k bought at 153.66 by Marketing and Distribution Director, David Cooper for his SIPP. So despite Schroders reducing their holding to 4.127% , I’m feeling less alone in thinking the panic here has been overdone. Anyone else?

On reflection, I pitched that on the optimistic side. What drop off would you venture to predict Dan? And I agree conservative pricing in of longevity risk (and profit margin) means insurers get to keep more money than under income drawdown. So you and then your family when you die get to keep more of the money through the latter. In that sense it's better value for money. But I care more about being sure I don't run out of money when I'm at the most vulnerable end of my life if I beat the odds and hit 110. That bothers me more than worrying the life co keep some profit and pay other punters' annuities from my money instead of my relatives getting it if I depart early. So I can't agree annuities are only for the incredibly intolerant to risk. For most people, I'd expect a hybrid solution to work best - part guaranteed, part flexible. And as proven innovators and specialists in this area, I'd expect PA. and JRG to ensure well placed to participate in that. But how that hits the overall drop in annuity market size certainly needs more thought than my first stab at it. I'd be glad to hear what number you'd put on it.

‘an exceptional buying opportunity’ is how Barrie Cornes and Keith Baird at Panmure Gordon (citywire: http://citywire.co.uk/money/partnership-and-just-retirement-exceptional-value-after-budget-slump/a741671 ) described the PA price drop at 55% down. So now at 60% down, couldn’t resist. This looks like a no downside, only upside opportunity while priced below the accumulated value of the existing business assuming no new business. But there is bound to still be new business too, so the question is how much. Whilst the overall market will contract, as a specialist provider of enhanced annuities, Partnership (and Just Retirement Group) stand to steal market share from “zombie” providers. By zombie providers, I mean ones who rely on the inertia of their existing pension savers to opt zombie-like into the in-house poorly priced annuity instead of shopping around. The biggest effect of the proposed new freedom, will not be to kill off annuities, as they are still the best way to insure against living longer than your cash and life expectancy is widely known to be increasing. Instead the main effect will be to make it unmissable that there is a choice and many more folk will get advice. So fewer (10 to 15%??) will take any annuity at all, the majority of the rest will still use part or all of their pension saving for an annuity, but at a much better price for them….which leads them straight into the arms of PA. or JRG. So not surprising PA.’s website is looking so upbeat about the announcement. It’s worth landing on their home page just to see the splendid expression on the old ladies face illustrating their banner headed ” Annuities. What took you so long, George?“ Very similar to me as I invested in them this morning. So I’m off now to dig out some numbers on market shares etc and see if I can deduce what new business might look like for PA. and JRG from 2015. BTW, surprising all quiet on the JRG board, given HL was showing £11m JRG bought after hours on Friday, and significant director buys there too. Wonder why no-one here interested in that one too?)

That's reassuring, thank you lukehere. Good to hear from someone with a much deeper knowledge of the company. Will hang on with renewed confidence to my belief this is undervalued.

still down on last year. A mystery to me how these mini stocks are valued. Anyone able to work out a fair price for this? This one has just reported its best ever year, no debt, started paying dividends, doubled EBITDA, has a strategy to continue sales and profit growth, is increasing R&D, is growing its cash pile which accounts for 28% of its market cap., is in a growing market, blah, blah, blah. So I thought I'd hit the jackpot this morning after jumping in yesterday before the price moved much. But here we still are, not much nearer to the 4p plus levels when last year's more modest results were announced and the price rose 6%+, as it did too for the interims. Oh, well, it's done much better so far today than the rest of the market, so fingers crossed for more progress when the rest of the market is back on an even keel. Thanks goodness for QPP. Anyway, at EPS growth of 72.7% growth, if PER is 18.55 at 3.5p, I got over-excited and came up with a PEG of .255 suggesting fair price 13.7p! Even I can see that's an overshoot, so realise I need the views of someone who knows what they're doing. It just seems cheap to me, but any wisdom gratefully received on my maiden post.