Every September, the life insurance industry in the US promotes Life Insurance Awareness Month, a campaign created originally by Life Happens (a nonprofit organisation founded in 1994) designed to “remind Americans about the importance of life insurance for their financial security.”
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.Â
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.
Related Posts
Slowing US PRT Market Sees Insurers Jostling for Business as Buy-Ins Surge
A consequence of a slowing US pension risk transfer market this year is that more…
Bermuda Life & Annuity Sidecar Market Quadruples as Alternative Asset Manager/Life Insurance Convergence Continues
The life & annuity sidecar market in Bermuda has grown almost four-fold to approximately $375bn…
Insurers Sweeten Bulk Purchase Annuity Offers as Buy-Out Timetables – and Costs – Look Set To Increase
Increased competition for defined benefit pension schemes’ de-risking business in the UK has resulted in…
Litigation Update: Wells Fargo Bank, N.A. v. Ameritas Life Insurance Corp
Decision by the US Court of Appeals for the Eighth Circuit affirmed the summary judgment…
