In the past 40 years, life expectancy has increased significantly as a result of a range of factors, including advancements in cardiovascular treatments and reduction in smoking prevalence. Looking forward, what will drive future longevity trends? Considering the main forces which are likely to affect mortality can be a beneficial exercise for firms when setting mortality assumptions. In this article, we consider the positive (“tailwinds”) and negative (“headwinds”)…
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.
Post a comment
Related Posts
UK Consumer Duty Barely Impacting an Equity Release Market Desperate for Interest Rates to Fall
It is now a year since UK regulator the Financial Conduct Authority (FCA) brought in…
Research Demonstrates Gender Differences in Early Onset Heart Disease
Cardiovascular disease (CVD) is the world’s leading cause of death, accounting for nearly 18 million…
Seck Affirmation Keeps Return of Premium Waters Muddy for Life Settlement Market
Life settlement asset managers pay significant sums of money to keep a life insurance policy…
US Authorities Leave Pension Risk Transfer Rules Untouched
The US Department of Labor (DOL) has concluded its review of the regulatory framework for…
