Matching adjustment ring-fencing provisions ‘a threat’ to mutual insurers

Provisions would prevent common funds structures and reduce diversification benefits, say insurers

Mutual insurers have slammed the ring-fencing requirements of the matching adjustment, saying the versions of the measure being tested in the long-term guarantees impact assessment (LTGA) would damage their business model.

Many mutual companies combine their with-profits business with other business lines, typically annuities, in a common fund in order to reduce their capital requirements through risk diversification. Under the LTGA's technical specifications, insurers would need to place a ring