Most UK life insurers’ SII ratios are about or above 200%, Fitch says

Written by Adam Cadle

25/09/2025

Most UK life insurers’ Solvency II (SII) ratios are about or above 200% despite weaker bulk annuity volumes in H1 2025 and lower new-business profitability, Fitch Ratings has said.

The SII ratios have been supported by resilient capital generation and still-heightened long-term interest rates. Fitch said it expects the ratios to moderate as insurers execute their pipelines and deploy more into private assets.

IFRS shareholder equity declined at most insurers, mainly due to larger capital distributions. Contractual service margin growth was subdued due to weaker new-business profitability and lower volumes.

Bulk annuity volumes were muted in H1 2025 at about £10bn, down from £15bn in H1 2024. This reflected fewer large transactions, although the number of transactions continued to grow, driven by increased activity in the small-scheme segment.

“Near-term pipelines for some writers may reduce as well-funded schemes consider running on,” Fitch stated. “However, we expect volumes of about £40bn in 2025 (2024: £48bn), with medium- to long-term activity remaining robust, driven by continued sponsor demand to de risk balance sheets.”

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