Charlotte Gerken: Moderation in all things

Speech by Ms Charlotte Gerken, Executive Director of Insurance Supervision of the Bank of England, at the 20th Annual Conference on Bulk Annuities, London, 27 April 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you for your introduction, and for inviting me back to the Bulk Purchase Annuities Conference. A lot has happened since I spoke at last year's event – in financial markets, the economic outlook and on the regulatory side.

And a lot is happening in the Bulk Purchase Annuities (BPA) market: pension scheme funding levels have greatly benefited from the rise in interest rates, and the UK insurance industry is preparing itself for record levels of bulk purchase annuity transfers.

De-risking corporates of their legacy defined benefit schemes brings substantial benefits to UK plc, and the additional capital insurers inject contributes to the security of pension scheme members. This structural shift in the provision of retirement income also gives insurers an increasingly important role as long term investors in the UK real economy. Insurers therefore need to balance the short term financial and reputational incentives to grow rapidly, with long term and enduring financial strength, to meet the long term needs of policyholders and the economy. I spoke to you last year about the conditions for long-term sustainable growth in the annuity sector. This year, in the face of considerable temptation to capture business opportunities, I will argue that BPA writers need to exercise moderation.