Skadden was pleased to return as a sponsor of ReDirect 2025, a conference focused on the UK and European life and annuity reinsurance sector. We joined a great lineup of fellow sponsors: Athene, Aviva, BMO, Brookfield, Canada Life, Hannover Re, Hymans Robertson, InEvo Re, Just Group, Legal & General, MBeckers, Milliman, Morgan Stanley, Oliver Wyman, Pacific Life Re, Prudential, RGA, Resolution Life, Sixth Street, Standard Life, Swiss Re, SCOR and Warwick. The conference was viewed as a resounding success and we are already planning for 2026.
Robert Chaplin, head of Skadden’s Financial Institutions Group in Europe, was joined by conference co-chairs Pretty Sagoo of Just Group plc and Marc Beckers of MBeckers to lead the discussion on European insurance and global reinsurance. Skadden associate Caroline Jaffer was a key speaker. Skadden partner Todd Freed, counsel Feargal Ryan and associate Chiara Iorizzo also attended.
Here are our top seven takeaways from ReDirect 2025:
- Summary of Industry Perspectives on PRA Speech and Roundtable
- Need for Outcomes-Based Regulation on Funded Re Rather Than Prescriptive Rules
- Key Themes for Life Reinsurance Sidecars
- The Utility of Different Prudential Solvency Regimes
- Reinsurance Opportunities Around the World
- Asset Incentives Arising From European Solvency II Reforms
- Reviving the Market for Individual Annuities
The recent speech by Vicky White, director for prudential policy at the Prudential Regulation Authority (PRA), on 18 September 2025 has reignited the debate surrounding funded reinsurance (Funded Re) and its appropriate regulatory treatment. Attendees broadly agreed that Funded Re is a “force for good” and has a legitimate role within a life insurer’s toolkit, provided that suitable checks and balances are in place. However, from the regulators’ perspective, Funded Re transactions can introduce systemic risk and additional complexity. This inherent tension between regulatory concerns and industry views has sparked significant discussion.
On 29 September 2025, the PRA convened a roundtable with industry participants to explore the potential “unbundling” of Funded Re for valuation purposes — separating it into two components: an investment asset and a longevity swap. The aim of this unbundling is to align the transaction’s value more closely with the actual Funded Re payment, likely eliminating the recognition of “day-one profit.” Several questions were raised regarding the practical implementation of this approach, and the PRA is expected to seek further feedback in the near future. The direction and development of this potential new regulation will be an important area to monitor in the coming months.
There was a clear sense among attendees at the conference that regulators must seek to regulate Funded Re through outcomes-based regulation rather than a series of prescriptive rules. The benefits of, and necessity for, Funded Re have been clearly articulated by the International Association of Insurance Supervisors (IAIS) and the PRA over recent months. Proportionate outcomes-based regulation is required to address perceived risks with Funded Re, so that Funded Re can continue to be a useful way to bring capital into life insurance markets, facilitate access to asset classes outside the cedant’s origination capacity, help address coverage gaps and generally improve policyholder outcomes.
While there have been a number of life reinsurance sidecars servicing US markets, mostly domiciled in Bermuda, there have been comparatively few life reinsurance sidecars servicing the UK and European markets. In particular, despite encouraging remarks from the PRA about the use of the UK insurance special purpose vehicles (ISPV) regime for UK life insurance sidecars, the PRA is currently not of the view that the ISPV regime is appropriate for use by a life insurance sidecar vehicle. Similarly, while the PRA has made significant progress reducing the time it takes to obtain MA approvals, there is no sense that it would be possible to promptly establish a new life (re)insurance vehicle in the UK to operate as a sidecar. In short, there is no straightforward route available to a potential investor and life insurance partner to establish a life reinsurance sidecar in the UK. It was clear from the conference that if there were a more straightforward way to establish a life reinsurance sidecar vehicle in the UK, this might afford a cedant life insurer some of the benefits of Funded Re while allowing the PRA to directly supervise the vehicle that would be more likely to invest in the UK when compared to an offshore reinsurer.
There is a clear trend towards global convergence on certain regulatory themes, such as the adoption of risk-based regulation across jurisdictions. However, maintaining distinct prudential solvency regimes offers important benefits. Different markets have tailored their solvency frameworks to address the specific needs of their domestic insurance sectors and the unique characteristics of their insurers. While approaches vary — most notably among the RBC, EU/UK Solvency II, and the Bermudian BSCR frameworks — these differences reflect the diversity of local market conditions.
Despite these variations, common themes are emerging across all three regulatory models, driven in part by the work of the IAIS. The IAIS’ paper published in March, which examined structural shifts in the life insurance industry, represents a significant contribution to the sector. It explored the role of Funded Re in the global life insurance landscape and the increasing use of alternative assets. The Bermuda Monetary Authority’s (BMA’s) reflections on this work provide valuable insights, particularly in the context of Bermuda’s market.
Looking ahead, further dialogue with regulators at the global level is expected, along with increased cooperation among supervisory authorities on these issues. This ongoing engagement will be essential as the industry continues to evolve and as regulatory frameworks adapt to new challenges and opportunities.
The US remains the clear leading market for life reinsurance transactions, with a clear legal and regulatory framework for executing these transactions. In Europe, the Netherlands and Switzerland are two countries with historic defined benefit schemes with sizeable assets under management, where opportunities to execute sizeable life reinsurance transactions remain, despite local legal and regulatory challenges. In Japan, there is a clear economic imperative among Japanese pension schemes and life insurers to diversify away from their exposure to the domestic Japanese economy. Funded Re is increasingly seen as an effective way to facilitate this. The recent reforms to the Japanese prudential solvency regime will only contribute to the continuing development of this market.
Under current Solvency II rules, the volatility adjustment is calculated based off an average asset allocation. From January 2027, the volatility adjustment will be adjusted to better reflect a (re)insurer’s actual risk exposure. The consensus is that this will lead to European (re)insurers holding more investments in senior securitisations on their balance sheets. Under the proposed rules, capital charges for senior securitisations could be reduced by as much as 80%.
It is recognised that the current pensions risk transfer market is expected to remain active for approximately another decade. Beyond this period, a resurgence in the individual annuities market is anticipated. The growing demand for annuity products will be driven by an aging population that is, in many cases, inadequately prepared for retirement. This demographic shift is likely to sustain and even increase the need for retirement income solutions in the years ahead.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.