PRA consults on changes to funded reinsurance capital rules for UK insurers

8 articles · Updated · Reinsurance News · Apr 29

The Bank of England’s PRA proposes raising capital requirements for new funded reinsurance deals from 2–4% to around 10%, affecting UK life insurers with £40 billion in exposure.
The changes aim to address regulatory inconsistencies, reduce reliance on funded reinsurance, and better protect pensioners, applying to new arrangements from 1 October 2026.
This consultation forms part of broader Solvency UK reforms to maintain financial resilience, encourage direct insurer investment, and ensure policyholder protection through the Financial Services Compensation Scheme.

With capital rules tightening for insurers, who will ultimately absorb the UK's growing pension risks?

Is this reinsurance crackdown a safety measure or a move to force investment into the UK economy?

How will the PRA’s complex new risk formula impact competition among global reinsurers in the UK?

Will the Bank of England's new rules shrink the UK's massive pension buyout market?

Could closing this regulatory loophole push insurers into even riskier, less transparent investment strategies?