Clara Pensions, the British pension superfund, celebrated its first anniversary of completing the assessment process for defined benefit consolidators in the U.K. by the country’s Pensions Regulator. Life Risk News’ Greg Winterton spoke to Ashu Bhargava, Chief Origination Officer at Clara Pensions, to discuss the organisation’s first year since completing assessment, the outlook for 2023 and the broader pension risk transfer market.

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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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