Earlier this month, Brookfield, under its Brookfield Wealth division, announced that it was entering the UK’s pension risk transfer (PRT) market, having gone through the approval process carried out by the Prudential Regulation Authority and the Financial Conduct Authority.
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
Questions Over UK Pension Risk Transfer Market as Government Mulls Defined Benefit Pension Surplus Changes
UK Chancellor of the Exchequer Rachel Reeves’ announcement at the end of January that she…
Recent Developments in Kidney Disease Treatment to Have Little Short Term Impact on Life Expectancy
The extent to which someone has chronic kidney disease (CKD) and the actual stage of…
Central Bank of Ireland AIFMD Q&A Update Provides Boost to Alternative Investment Funds
Ireland’s status as a popular European domicile for life settlement funds is rooted in the…
Falls: Significance in Life Expectancy Underwriting
As our population ages, the significance and frequency of falls increases. This affects life expectancy…
