Obesity is a killer, but nobody dies directly from being overweight. Instead, excess pounds are linked to a higher risk of getting type II diabetes, developing fatty liver, and having a stroke, while research links obesity to up to 8% of all cancer cases. Obesity is a factor in all of the four main non-Covid causes of deaths in the UK in 2022, while diabetes itself is a risk factor for heart disease, the leading cause of mortality worldwide.
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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