The Life Insurance Settlement Association (LISA), a Washington, DC-based trade association, unveiled its annual transaction data at its investor conference this past May 1st. Each spring, LISA surveys its life settlements provider members about the secondary market transactions that they participated in during the previous year; the members provide this data anonymously through a secure portal, which LISA then aggregates and publishes.
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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