The 2025 edition of the Life Insurance Fact Book – the American Council of Life Insurers’ (ACLI) annual review into the inner workings of US-based life insurance company balance sheets – was published in early November. As with previous years, I will be highlighting some notable and interesting takeaways from the Fact Book for a series of articles for Longevity and Mortality Investor, starting with this one, a review of key statistics for the US life insurance industry in general and some that have relevance for the life settlement industry in particular.
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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