London, April 30, 2026, 16:04 BST
- Legal & General shares picked up in London following a sluggish Wednesday, as investors weighed a Bank of England proposal to tighten rules around funded reinsurance—the offshore risk-transfer tool relied on by UK life insurers. Share Prices
- The PRA is pushing for capital requirements on the typical funded reinsurance deal to rise sharply—targeting about 10% of annuity liabilities, up from the current 2% to 4%. Bank of England
- This hits a crucial business line for Legal & General, Aviva, and Standard Life: bulk purchase annuities—insurers assume pension obligations from companies. Reuters
Legal & General Group Plc shares climbed in London on Thursday. The spotlight, though, shifts to regulation: the Bank of England’s Prudential Regulation Authority is pushing for stricter capital requirements on funded reinsurance—a setup life insurers rely on to offload risk to mostly offshore reinsurers. Bank of England
Timing is key here. Legal & General has staked its growth ambitions on retirement income and pension risk transfer, and the PRA’s decision could reshape how UK insurers price and structure major pension buyout transactions. In these buyouts, insurers assume responsibility for defined-benefit pension payments—typically spanning decades. Legal & General Group
In March, Legal & General disclosed it wrote £11.8 billion in global pension risk transfer deals for 2025, with £10.4 billion of that coming from the UK market. Core operating profit landed at £1.62 billion, showing a 6% rise. The insurer also unveiled a £1.2 billion share buyback, which fits into its broader plan to return more than £5 billion to shareholders over 2025-2027. Legal & General Group
The PRA puts the current capital requirement for average funded reinsurance deals at 2% to 4% of underlying annuity liabilities. That’s a sharp contrast to the 11% to 15% needed for the same assets on insurers’ own books. If the new plan goes ahead, that capital charge lands closer to 10%. Bank of England
Legal & General shares traded 1.2% higher at 250.85 pence as of 14:47 in London. Wednesday’s close: 247.85 pence. Still, the stock hasn’t reclaimed its 52-week high of 279.50 pence. Share Prices
Sam Woods, chief executive of the PRA and deputy governor for prudential regulation, flagged the “growing rapidly” funded reinsurance market, warning it could undermine insurer resilience if mismanaged. The PRA pegs UK firms’ exposure at roughly £40 billion. Bank of England
Aviva, Legal & General, and Standard Life are among the big UK life insurers, according to Reuters, while names like Apollo, KKR, CVC, and Carlyle have made moves into reinsurance. The proposal’s edge? It’s less about capital requirements, more about which player can price pension transactions most sharply. Reuters
The PRA clarified that existing deals, as well as those wrapping up soon, are excluded from the proposals. New business, though, falls under the scope starting Oct. 1. The consultation runs through July 31, with the paper laying out July 1, 2027, as the target for implementation. Bank of England
On Thursday, Skadden’s Robert A. Chaplin, Feargal Ryan, and their team warned the new rules could “double or even triple” the capital that insurers need to keep for a typical funded reinsurance deal. In their view, that’s likely to raise entry barriers and drive more consolidation in the UK life insurance and reinsurance sectors. Skadden
Huw Evans, KPMG’s UK insurance chief, described the PRA’s actions to Reuters as going “further than its global peers.” He added that insurers might now question whether the decision aligns with Britain’s broader growth ambitions. Reuters
Legal & General’s capital-return game hasn’t lost steam. According to the company’s own tracker, by April 24 it had snapped up 54.9 million shares, spending £138.8 million. The most recent weekly tally: 19.4 million shares bought at an average price of £2.5717. Legal & General Group
Trowers & Hamlins on Wednesday said it advised Legal & General Affordable Homes in securing a £25 million revolving credit facility from HSBC, with the potential to boost commitments up to £100 million. According to the firm, proceeds will go toward social projects and support general corporate needs. “The flexibility it needs,” is how Trowers partner Natalie Singh described the structure. Trowers & Hamlins
The risk here: the final rule could end up changing less than expected—or later—or stuffed with more carve-outs. Should the PRA keep its proposal mostly intact, funded reinsurance might lose appeal for bigger pension transactions. That would leave Legal & General and its competitors handling more capital burden themselves, passing some costs to pension plans, or relying more on direct investment. According to the PRA, about 85% of recent bulk purchase annuity deals didn’t use funded reinsurance, so the regulator anticipates only a limited short-term impact on the market. Bank of England
