Total US pension risk transfer (PRT) new premium was $7.1bn in the first quarter of 2025, according to LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey. While this is 51% lower than the record-high sales set in the first quarter of 2024, at 127 contracts, the market contracted only 13% from prior year. Greg Winterton caught up with Carl Groth, Chief Risk Officer at Legal & General Retirement America, to get his thoughts on the state of the market as we enter H2.
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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