Ten annuity providers invested £22.8bn under ABI pledge

Ten annuity providers reported £22.8 billion of investment in 2024 and 2025 under the ABI's £100 billion pledge, including £11.5 billion in 2025, according to the ABI's second update, reported by Insurance Asset Risk. The other £11.3 billion was reported for 2024, so the annual pace was little changed.

Ben Howarth of the ABI said the main obstacle is now a shortage of projects ready for investment. Many regional schemes are still at the development finance stage and sit at multiple, inconsistent stages of progression, he said. Once a project type becomes a consistent asset class, 'the level of work that they would need to do on their due diligence comes down significantly,' he said.

For an insurer's general account weighing a UK infrastructure allocation, the variable Howarth describes is the fixed cost of due diligence per scheme rather than the credit itself. Standardised project types would lower that cost, which suggests smaller regional schemes could clear an insurer's general account's underwriting threshold sooner than their size alone implies.

The ABI report's lead example, the Haweswater Aqueduct Resilience Programme in the North West, will replace six tunnel sections on a 110km aqueduct. Construction starts in 2026 and is expected to take nine years. The estimated construction cost is about £3 billion, against an original budget of about £1 billion. When the contract was tendered in 2022, the estimate was £1.75 billion including maintenance and financing.

Eight of the ten pledge firms financed the aqueduct, according to the report: PIC with £300 million, Aviva and Rothesay with £200 million each and Scottish Widows with £100 million. It is the first project under Ofwat's Direct Procurement for Customers model, in which a separate company designs, builds, finances and maintains a large asset in place of the water company. Cascade Infrastructure is owned by Strabag, Equitix and GLIL Infrastructure. Strabag UK is the design and build contractor.

Insurance Asset Risk noted that the ABI report presents the project as private capital at work without the £300 million credit enhancement guarantee Cascade holds from the government-owned National Wealth Fund. The insurers are lenders: they do not manage the construction and have no more influence over the tunnelling than a bank or a gilt holder would, the article said. Ofwat's July 2025 guidance on the project sets a target-cost contract, with provision for conditions not expected when the bid was made, such as different ground conditions. The report's figures show the estimated cost had already risen before any tunnelling began.