PRA consultation aims to help insurers accelerate investment in UK

The Prudential Regulatory Authority (PRA) has launched a consultation to help insurers accelerate investment in the United Kingdom.

In its consultation paper the PRA proposes rules to reform the Matching Adjustment (MA) application process by introducing a new Matching Adjustment Investment Accelerator (MAIA) permission.

The proposals for a MAIA look to reduce barriers that currently slow down investment decisions for insurance firms.

By introducing this new permission, insurers would be able to immediately recognise the benefits of the MA, even before the full permission is formally granted.

Under the proposals, firms with an MAIA permission will have 24 months to submit a formal MA application on eligible assets with new features. This shorter timeframe aims to mitigate the risk of insurers missing out on investment opportunities that are time-sensitive.

The PRA anticipates that this initiative will support its secondary objective of promoting greater international competitiveness and fostering the growth of the UK economy.

Sam Woods, Deputy Governor for Prudential Regulation and CEO of the PRA, said: “This innovation will enable insurers to make more rapid investment decisions and support growth in the UK economy, while protecting policyholders.”

The Matching Adjustment is a mechanism that allows firms to discount their liability cash flows at a higher rate than the basic risk-free rate, resulting in a lower liability value.

This consultation paper is relevant to insurers that currently have an MA permission, or those that may seek an MA permission in the future.

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