UK life firms rethink forex hedging after PRA note

A note from the UK regulator on the Solvency II matching adjustment shuts the door on firms using rolling forward contracts to hedge forex risk. Rob Mannix reports on a shock that leaves some insurers with just months in which to overhaul hedging programmes


After months of preparation for the Solvency II matching adjustment, the UK regulator has ruled out a key part of some firms’ plans in a letter published just days before official submissions began.

In the most recent of a string of communiqués on the subject, dated March 28, the Prudential Regulation Authority (PRA) shut the door on firms using foreign exchange forward contracts to hedge forex risk on matching adjustment assets. While insurers had fretted over whether more exotic assets would

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The future of life insurance

As the world constantly evolves and changes, so too does the life insurance industry, which is preparing for a multitude of challenges, particularly in three areas: interest rates, regulatory mandates and technology (software, underwriting tools and…

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