FIn a ruling that sets up North Carolina as a favorable jurisdiction for the life settlement business, a judge has ruled in favor of Wells Fargo in a dispute over the legality of a policy that North Carolina resident Dr. Gordon E. Trevathan Jr. took out on himself to later sell purely as a profit-making venture. The Hon. Mark A. Davis, Special Superior Court Judge for Complex Business Cases, issued an order in May finding that the Columbus Life Insurance Co. policy…
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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