The average life expectancy of a newborn human in 1900 was 32 years, and according to Our World in Data, by 2021, that more than doubled, to 71 years. So, what are the chances then that the next 100 years or so brings about a similar jump? Pretty much zero, according to Implausibility Of Radical Life Extension In Humans In The Twenty-First Century, a new article…
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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