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Solvency II may bring bulk move

Solvency II could push protection providers to bulk-transfer deals, says Pru Protect Actuarial and product director Deepak Jobanputra.

He said new capital requirements could bring opportunities for providers to transfer risk into the capital markets, similar to bulk annuity deals. He said reinsurers currently provide “tremendous” financial support for insurers but with initiatives like Solvency II happening around 2012 that will change things.

He added: “We have seen a few big deals such as annuity deals, being packaged up and put into the capital markets. Nothing yet on the protection side but I am sure it is only a matter of time before they are trading investments in the capital markets.”

RGA UK pricing and research actuary Eli Friedwald says by not bulk-transferring protection books, the life insurance market is being left behind compared with other product areas.

He says: “Life insurance has been left behind in comparison to annuities, partly because of bulk annuities. It is a mega business at the moment.”

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