Established in 1994, the Life Insurance Settlement Association (LISA) is the oldest and largest trade organisation in the life settlement market. LISA’s membership consists of brokers, providers, financing entities and service providers to the industry such as law firms, medical underwriters, consultants, investment funds, actuarial firms, trustees and escrow agents, which all support LISA’s core purpose: To promote the development, integrity and reputation of the…
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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