Author: Greg Winterton

The outlook on the UK life insurance market is ‘staying stable’, according to credit rating agency AM Best in a new report.   In “Market Segment Outlook: United Kingdom Life Insurance”, AM Best cites a number of factors supporting its stable outlook, including a strong pipeline for pension risk transfers, as higher interest rates have improved the funding ratio of defined benefit schemes.  The report also suggests the improved interest rate environment will likely support investment yields. At the same time, investment opportunities are likely to broaden after prudential regulatory changes, notably the revision of the matching adjustment framework.  A factor…

Consulting and actuarial firm Milliman has released the results of its latest Milliman 100 Pension Funding Index (PFI), which analyses the 100 largest US corporate pension plans.  During May, the Milliman 100 PFI funded ratio rose from 103.1% at the end of April to 103.4% as of 31st May, driven by investment returns of 2.29%, the best-performing month of 2024. These gains lifted the net market value of PFI plan assets by $22bn for the month, to $1.296trn. They helped offset the decline in discount rates, which fell in May by 15 basis points, to 5.53%, and caused plan liabilities…

US life insurance application activity was flat in May 2024 compared to May 2023, with Year-over-Year (YOY) activity at -0.6%, according to the latest MIB Life Index.  Notable this month is that when examining YOY activity for May 2024 by face amount, there was double-digit YOY growth for amounts over $500k, and flat activity for amounts up to and including $500k.  May 2024 saw double-digit YOY growth in activity for Whole Life (up +12.5%), declines for Term Life (-1.9%) and double-digit declines for Universal Life (down -20.8%).  Universal Life, the type of policy most commonly seen in the life settlement…

The results of a recent survey of 152 defined benefit pension schemes in the UK by professional services firm Aon indicates that a majority of schemes now have a professional trustee on their board.   In the survey, Aon found that 57 per cent of respondents reported that they had appointed a professional trustee already. Aon expects this proportion will continue to rise in the future.  “A professional trustee won’t be appropriate for all schemes – many of which will already have highly experienced trustees on the board – but with the increased focus from employers on endgame planning, we expect…

The life settlement industry enjoyed its third consecutive year of growth in the number of transactions completed in the secondary market, according to new data from trade publication The Life Settlement Report, part of The Deal. The data collected by The Life Settlements Report comes mainly from state insurance departments through public records requests. For the calendar year 2023, the total face value of all transactions was $4.72bn, which is the highest recorded level since 2009. Furthermore, 3,181 deals were completed in the industry, the third consecutive year of growth and the second highest in the past five years (3,241…

The Bank of England’s Prudential Regulation Authority (PRA) has finalised its changes to the Solvency II regulation.  Policy Statement 10/24, issued yesterday, revolves around the changes to the matching adjustment (MA) component of the regulation; these changes broaden the assets that qualify for inclusion in MA portfolios.   The UK government is looking to direct capital into productive assets, and it will hope that the new regulations encourage insurers to invest accordingly. It’s unlikely that this will be a quick win, however.  “Today’s announcement has confirmed that there will be increased flexibility in the type of assets that insurers can invest…

Total US pension risk transfer (PRT) premium was $14.6bn in the first quarter 2024, 130% higher than first quarter 2023, according to LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey.    There were 146 contracts sold in the first quarter, 26% higher than the prior year. These contracts cover almost 200,000 pension participants. Since January 2020, US PRT deals have covered more than 2.5 million participants.  “Demand for PRT solutions continues as favorable economic conditions spur plan sponsors to de-risk their pension obligations,” said Keith Golembiewski, assistant vice president, head of LIMRA Annuity Research.  “While there were a few jumbo deals…

A new article from S&P Global suggests that insurance companies that participate in the UK’s bulk purchase annuity market could benefit from increased oversight from both the British and Bermudian regulators. Credit FAQ: Funded Reinsurance Deserves The Heightened Regulatory Scrutiny takes a deep dive into the inner workings of the funded re market, covering areas such as the recent growth of the market, the risk mitigations that insurers in the space employ, advantages of funded re when compared to longevity risk transfer, the key regulatory developments, and S&P’s view of the key risks in the market. “Although it is still far more…

Reverse mortgage-backed security issuance improved last month when compared to April, according to New View Advisors’ latest commentary article. The firm says that HMBS issuance was $526m in May versus $503m in April, an uptick of $23m. The number of pools issued was down slightly, however, from 89 in April to 86 in May. The 86 pools issued in May consisted of 22 first-participation or original pools, 63 tail pools, and one pool which included both new production and tails. Original pools are those HMBS pools backed by first participations in previously uncertificated HECM loans. “Notable in the May HMBS issuance data are…

PIC has concluded a £204m full buy-in of the Arqiva Defined Benefit Pension Plan.  The transaction secures the pensions of both deferred and pensioner members of the plan, which is sponsored by Arqiva Limited, a British telecommunications company; it comprises 589 current pensioners and dependents and 215 deferred members. “I’m delighted that we have successfully completed this buy-in, which insures the benefits of all our Plan members,” said Tom O’Connor, Chair of the Board of Trustees of the plan.  “I am grateful for PIC’s work in achieving this outcome. I want to thank my fellow Trustee Directors, including Dan Gilmour and Akash Rooprai…