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Spotlight on risk transfer and insurance series  |  Part 3
 

The current UK implementation of the Solvency II Matching Adjustment (MA) framework has resulted in a complicated system for reserving and assessing capital requirements for annuities.

It's a significant time of change for those in the annuity risk transfer market.

This technical article explores what the Matching Adjustment (MA) is trying to do, and considers ways in which that might be more simply achieved.

Our insight will investigate:

  • the underlying sources that have created complexities around the system;
  • how the system will likely be affected by the Solvency UK reforms;
  • the MA discount rate and illiquidity;
  • VaR and transfer values;
  • an analysis of different capital measure approaches; and
  • the future of the regulatory solvency framework.
A woman with glasses gestures while discussing annuities in a professional setting. The background features blurred furniture. The text discusses complexities in reserving for annuities and regulatory reforms.

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Download our briefing note to gain a deeper insight into the system for reserving and assessing capital requirements for annuities.

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The Fundamental Spread

Reforming the UK’s implementation of Solvency II into a tailored solvency UK system is now underway, and is likely to have significant implications for businesses across the country.

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Internal securitisations and Solvency UK

Internal securitisations could be regarded as an unintended consequence of the Matching Adjustment (MA) framework, and creates a range of opportunities and challenges for UK businesses.

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