Like most asset classes in the alternative credit market, the life settlement industry has had an interesting few years as macroeconomic changes have impacted fundraising and deal flow. Greg Winterton spoke to Anna Bailey, Managing Partner at asset manager Chestnut Capital Management, to get her thoughts on the current state of the space.
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
Illiquid Assets a Blessing and a Curse for Pension Schemes en Route to a Bulk Purchase Annuity Solution
Defined benefit (DB) pension schemes seeking an insurer-led buy-out will, in many instances, have to…
Canadian Pension Risk Transfer Market Set for Record Year Even As Interest Rates Fall
The C$7.8bn worth of deals struck in Canada’s pension risk transfer (PRT) market in 2023…
Australian Equity Release Mortgage Securitisation Market Set for Take-Off?
Equity Release mortgage securitisations carry a range of benefits for institutional investors when compared to…
Climate Change Likely To Have Multiple Mortality Impacts
The 2015 Paris Agreement targeted a long-term goal to keep the rise in global surface…
