In the United Kingdom, unit-linked insurance makes up the largest proportion of the life insurance market. According to the latest set of Solvency and Financial Condition Reports (SFCRs), in 2017, 60% of the technical provisions (equating to approximately £1.1 trillion) and 69% of the gross written premiums for UK life insurers related to unit-linked business. Approximately 11% of all unit-linked business in the UK is reinsured, equivalent to approximately £127 billion or 66% of all reinsurance in the UK life insurance market.
This paper by Milliman consultants summarises a number of the most material developments affecting unit-linked insurance business that occurred during 2018 and which remain areas of ongoing focus.
In May, the Prudential Regulation Authority (PRA) issued two complementary publications in response to its November 2017 consultation paper CP23/17 ‘Financial management and planning by insurers.’ The policy statement and supervisory statement issue further guidance and feedback based on industry responses to CP23/17, which set out the PRA’s expectations on effective financial management and planning by insurance firms and groups. This paper by Milliman’s Marie-Lise Tassoni and Fred Vosvenieks provides an updated summary of the supervisory statement.
For many firms, year-end 2017 will be the first time that they need to recalculate the Transitional Measure on Technical Provisions (TMTP relief), although some firms have already applied and received approval for a recalculation following material changes in their risk profiles.
Milliman consultants have experience in recalculating the TMTP relief for a number of clients, performing independent reviews of recalculated TMTP relief, and have provided assistance with the development and review of firms’ recalculation policies.
This update by Milliman’s Oliver Gillespie, Emma Hutchinson, Marie-Lise Tassoni, and Stuart Reynolds summarises findings from these exercises, along with our own views on different potential approaches to recalculating the TMTP relief and associated key issues and challenges.
The Spring 2016 edition of Milliman’s Issues in Brief features articles about the dynamic reporting of management information (MI), valuing lifetime mortgages, the Own Risk and Solvency Assessment (ORSA) process, and embedded value reporting.