Smoking rates in the UK have been falling since records were first taken in 1974, having previously reached levels of over 80% of men in the late 1940s, according to anti-smoking lobby group, Ash, which now estimates around 13% of the country’s population uses nicotine. The UK’s new Labour government is aiming to drive these numbers down even further and on 5th November it introduced the Tobacco and Vapes Bill which, if put onto the statute book…
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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