Standard Life Investments

Inside Global Insurance Investment

PRA Consultation Paper – Illiquid Unrated Assets in Matching Adjustment portfolios

Experience since the introduction of Solvency II has demonstrated the substantial regulatory interactions required to efficiently access private credit assets.

March 2017

Experience since the introduction of Solvency II at the start of 2016 has demonstrated to many insurers and their asset managers the substantial regulatory interactions required to efficiently access private credit assets. This has been publicly highlighted by the PRA’s December Consultation Paper on the treatment of illiquid unrated assets in Matching Adjustment (MA) portfolios. The public protests by senior insurance executives from some of the largest private asset insurance investors are another notable indication of the challenges confronting the industry in meeting these regulatory demands.

In light of these significant issues, the Institute and Faculty of Actuaries recently established a Working Group, ‘Private Credit for Insurers – Meeting the Regulatory Requirements’. Chairing the group is Iain Forrester of Standard Life Investments’ Insurance Solutions team.