BoE weighs up further action on funded reinsurance

Written by Adam Cadle

01/05/2025

The BoE might consider further action on funded reinsurance arrangements used by pension insurers as it seeks to minimise risk to the wider UK economy, executive director, insurance supervision, Gareth Truran has stated.

Speaking at the City Annual Bulk Annuities Conference in London, Truran said: “There are areas where some firms are falling short.

“In particular, the limits which insurers have set to manage their funded reinsurance exposures are not always aligned with our expectations. It is also not clear that the frameworks firms have in place for managing their funded reinsurance adequately mitigate the potential for a build-up of systemic risk in aggregate.

“While our expectations were designed to set important baselines for prudent risk management practices, they have not so far appeared to materially alter the outlook for funded reinsurance volumes, nor do they appear to have prevented a trend towards weaker collateral standards.

"This work will remain a supervisory priority for us in 2025 and we will continue to consider whether further action is needed to address the risks in the light of our findings.”

Related Articles