Fears of runaway risk on offshore reinsurance

Life insurers catch the eye of UK regulator for pension buyout financing trick

Aerial view of the island of Bermuda
Many offshore reinsurance firms are based in Bermuda

UK life insurers think they have found a neat solution for a capacity problem that threatened to slow the booming pensions buyout market. Regulators, though, don’t much like what they see.

Around £50 billion ($63 billion) of pension liabilities were transferred from schemes to insurers last year. And to free up capital to do more of these deals, insurers have been turning to a relatively novel tool: funded reinsurance.

Funded reinsurance allows insurers to pass on the investment and longevity

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