The secondary market in life settlements comprises mainly two channels – an intermediary-based one, and the direct-to-consumer one. The former has been, for many years, the larger of the two, as American seniors worked with brokers to sell their life insurance policy to a third- party investor. But the D2C channel has been growing its share of the pie in recent years, and…
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
New Report Provides Both Food for Thought and Positive Reinforcement for Life Settlement Market
The life settlement industry regularly touts the lack of correlation to public equity and liquid…
UK Pension Risk Transfer Market Posts Another Stellar Year
The UK’s pension risk transfer (PRT) market had a busy year in 2024, continuing the…
Activity in Asset Intensive Life Reinsurance Solutions to Remain Healthy
The higher interest rate environment of the past few years has had the impact of…
Advancing Frontiers in Metastatic Melanoma: Innovations, Treatments, and Improved Survival Outcomes
Melanoma of the skin (cutaneous melanoma) is a malignant tumor originating from melanocytes, the skin…
