Insurance ERM today has a fine table and an accompanying article showing how much life insurance companies are ‘benefiting’ (my scare quotes) from Matching Adjustment.
In summary, the total benefit of MA (created capital plus reduced capital requirement) is now £92bn, up 13% from 2019, and probably reflects the growing business in bulk annuities.
“In 2020, the biggest beneficiary was Legal & General (£28.4bn), followed by Aviva (£14.5bn) and Rothesay Life (£14.1bn)”
The data now allows us to update our own table on the capital coverage ratio ‘benefit’.
The blue line shows the capital coverage ratio with MA, the red line, the same ratio but without MA. The usual suspects are still lurking at the right hand side.