Two recent life settlement industry data reports – trade association the Life Insurance Settlements Association (LISA)’s 2022 Market Data Collection Survey and industry magazine The Life Settlement Report, part of The Deal’s annual report on secondary market transactions – suggest that activity in the secondary market improved in 2022 versus 2021 – albeit, very modestly. Life Risk News’ Greg Winterton hosted a virtual roundtable in late July with…
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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