Data from The Life Settlement Report, a part of The Deal suggests that 2021 saw a reduction in deal activity in the secondary life settlement market, the first such reduction in seven years. Life Risk News’ Greg Winterton spoke to life settlement brokers Rob Haynie, Managing Director, Life Insurance Settlements, Inc.; Jon B. Mendelsohn, CEO, Ashar Group; and John Welcom, Founder & CEO, Welcome Funds to get their views on the current state of supply of life settlements in…
Insurers are favouring funded re as it helps firms manage the market and longevity risks associated with writing bulk purchase annuity (BPA) business by reducing capital charges and therefore making PRT deals more competitive.
Unsurprisingly, given its growth and potential for capital optimisation, UK regulators have been carefully watching the increased use of funded re. In June 2023, the Prudential Regulatory Authority (PRA) sent a “Dear CRO’ letter to heads of risk at UK life insurers.
The letter outlined the regulator’s two main concerns from a sectoral review which it had carried out.
“One of the key risks arising in funded re is that firms recapture sub-optimal portfolios with depressed values and with limited ability to be transformed effectively to the firms’ preferred portfolio,” the PRA letter said.
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