PRA publishes final rules for new Solvency UK MA

Written by Adam Cadle

07/06/2024

The PRA has published final rules for the new Solvency UK matching adjustment (MA), easing some of the restrictions and thus allowing greater flexibility for insurers to invest in a wider range of assets.

The regulator has said it will now allow a more flexible calibration of the additional matching tests for “highly predictable” assets.

Furthermore, it has amended the rules to ensure all in-payment income protection business and in-payment group dependent annuities will be eligible for the MA. Some relief has also been given in the attestation process and reporting requirements.

“Today’s announcement has confirmed that there will be increased flexibility in the type of assets that insurers can invest in,” Nick Ford, partner, head of risk and capital, Hymans Robertson.

“However, it will take time to significantly increase flows into these newly permitted assets and there will still be asset classes, such as some infrastructure funds that pension schemes currently hold, that they will find very challenging to include in their portfolios. Expecting that, insurers have already engaged with the PRA to explore suggestions on further reform to accelerate these moves and deliver the extra investment that the government is seeking.”

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