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NEWS IN BRIEF
PRA Funded Reinsurance Consultation Closes Amid Industry Pushback
IIF warns proposed capital calibration overstates cedant risk.
10 August 2026 • Page 3 • Reinsurance & Transactions
Industry Braces for Rules That Could Double or Triple Capital Requirements
The Transaction
The PRA’s CP8/26 consultation on funded reinsurance capital calibration closed 31 July 2026.
On 22 July, the Institute of International Finance responded, backing continued oversight of the growing bulk purchase annuity market, but warning that the proposed counterparty default adjustment calibration overstates cedant risk and could raise costs across the market.
The Strategic Picture
Implementation remains slated for 1 July 2027, applying to funded reinsurance entered into from 1 October 2026 — giving the market a defined runway to adapt before the rules bind.
Worth watching whether the PRA softens the calibration in response to industry pushback, or holds its position through to final rules.
Market Perspective
Market participants have separately warned that the proposed changes could double or even triple capital requirements for the average funded reinsurance transaction — a scale of impact that could become a driver of further consolidation among both reinsurers and UK life insurers as smaller players struggle to absorb the added capital burden.
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