20 June 2018
The significance of the Matching Adjustment (MA) for annuity writers is well understood – with David Rule recently confirming the value to UK firms to be £66bn. With strong growth forecast in the bulk annuity de-risking market, this figure will get bigger and bigger.
Running MA portfolios, however, is far from plain sailing – firms are encountering a number of challenges on a day-to-day basis. Therefore the Institute and Faculty of Actuaries (IFoA) Matching Adjustment Working Party has been focusing its efforts on influencing the ongoing debate on how firms can overcome these challenges.
At the end of last year, we supported the drafting of the IFoA’s response to the PRA’s Consultation Paper (CP) 21/17. A number of helpful proposals were put forward by the PRA, but we did not view the CP as a game-changer for the industry.
Currently, we are producing a paper which we hope will act as useful reference material for those involved in running MA portfolios. The aim of this paper is to summarise the key challenges firms are encountering on a day-to-day basis – using case studies to bring them to life – and to put forward thoughts on some practical ways firms may be able to overcome these challenges.
We intend to publish this paper ahead of the Life Conference in November 2018. In the meantime, we welcome any thoughts and comments you have on what you would like to see covered in it.