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UK insurers warned about risks of solvency clauses in pension contracts

( July 4, 2025, 11:36 GMT | Official Statement) -- MLex Summary: Chief Risk Officers at UK life insurers that underwrite bulk purchase annuities have been warned by the Prudential Regulation Authority of the risks stemming from Solvency-Triggered Termination Rights. The STTR clause allows a pension scheme to cancel its contract with an insurer if its financial health rating drops too low. A review from the PRA found that risks include impacts on the composition of a firm’s remaining asset portfolios, liquidity positions, management of its Matching Adjustment portfolio, as well as operational challenges if the clause is triggered in a stress situation. The authority asked firms that haven't demonstrated they're taking the risks into account to take remedial actions.Statement is attached....

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