Watered-down matching adjustment would be ‘utterly worthless'

Inclusion of credit risk in risk margin criticised

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Certain UK insurers are reconsidering whether to apply for the Solvency II matching adjustment (MA) as regulatory communications suggest the benefits of the measure could be significantly watered down. One chief executive officer at a UK life firm, who did not wish to be named, went so far as to say the adjustment could be "utterly worthless" if the most recent definition stuck.

The latest communication from the European Insurance and Occupational Pensions Authority (Eiopa) states that insurers