The hope we are all carrying into 2009 is that the year will be less eventful than its predecessor. Sadly, few of us expect that to be the case. Talk of redundancy and recession is stalking the corridors of virtually all private sector organisations and we have got to the point that no area of business has been untouched by the downturn.
The corporate intermediary sector has been relatively well insulated from the broader problems in the financial services sector. But evidence is already starting to filter through of employers putting projects on hold, blocking access to benefits for new joiners and even asking for payment holidays for defined contribution pension schemes. Better, some employees would no doubt agree, to miss out on deferred pay through pension, than pay or pay increases today.
For most of us the question is when will the bottom be reached and how long will we be down there. Only a fool would make that call with any degree of certainty. But there are signs that while we are not even near the end of the beginning, to mangle Churchill, we are at least starting to get to grips with the new world order. In other words, we are getting so used to volatility and corporate collapse that nothing is a surprise any more.
This is no consolation for the staff and shareholders of the companies who are expected to go to the wall in the coming months. Corporate bonds are pricing in defaults of around 18 per cent, more than four times the default rate in the Depression of the 1930s. We can only hope that is not an accurate reflection of what awaits UK plc.
But one intriguing area where business has started again is the bulk annuity market. The day Lehman Brothers filed for bankruptcy, all providers stopped offering guaranteed quotes. For weeks people were calling time on the sector as the market volatility seemed to be making pricing anything impossible. But in the last two weeks of the year we have seen the biggest ever deal, worth over £1bn, and another smaller but significant £150m deal. Is this a sign that markets are moving again? Probably not. But it may be an indication that business people are coming to terms with the chaos. We can only hope so.
On a brighter note, I am pleased to introduce in this issue a new monthly comment piece for the group risk sector. In future our comment pages will include a monthly contribution from the very highest profile figures from the adviser and provider communities to bring you thought leadership in this most important of sectors.
Things may look grim but I would also like to take this opportunity to wish you all a happy New Year from all at Corporate Adviser.