The underwriting process in the life settlement industry has changed in the past two decades, as the accumulation of more data, and the increasing accuracy of that data, along with a generally expanding mortality profile of humans, has seen life expectancies (LEs) extending. Greg Winterton spoke to Dr Rahul Nawander, Medical Director at Fasano Underwriting, to get his views on what is impacting LEs generally from a medical perspective.
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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