I have blogged on this speech recently and it’s good to see a UK insurer (M&G) putting clear blue water between us and Bermuda (pun intended).

I am not sure whether any of my readers is in the process of buying in Bulk Annuities or even buying out their DB schemes. I had not considered that pressure on them to complete such a transaction might be speeded up to “enjoy” funded reinsurance.  A trustee and an employer will need to consider a TAS 300 assessment.

Will that assessment  imply the trustees and sponsor engage with a solution that relies on such funded reinsurance?

Should trustees place member’s pensions in a solution  of the type the PRA worry isn’t “really suitable”for the UK Solvency?

I am aware of the capital pressure on UK insurers ( I know of one household name that does not have capital to buy into DB pensions at present – there may be others). I can see the temptation for such a firm to partner with or sell out to capital rich overseas sources of capital adequacy supplied through Bermudian and other offshore financial centres.

But I share the PRA’s disquiet that we are giving away control of our mature and massive DB pension schemes and the good that their capital can do for Britain.

I am very pleased that M&G are being responsible in bringing their disquiet to Linked In and I am glad that the blogs I have written on reinsurance are getting read. I have seen good ideas turn sour; yesterday I was with one of the two originators of LDI , discussing its progress to a stampede with no regard for the fundamental value of pensions.

We need to take a step back from projects underway to pass off our pension liabilities to insurers and then to funded reinsurers.  We should listen very carefully to what Vicky White of the PRA said on 18th September. The PRA published that speech for a reason.

A reinsurer going wrong isn’t something we can do much about – here in the UK. Taking the funds built up over decades for people’s later lives is not something offshore reinsurers should be doing, unless we know what is going on. The people most at risk have no idea of what is going on.