Pension trustees have been cautioned against drawing "quick conclusions" from the insurer-specific results of the Prudential Regulation Authority's (PRA) life insurance stress test (LIST 2025), as industry experts highlight the nuance and limitations of the test.

The PRA's insurer-specific results were released today (24 November), building on last week's sector-level findings, which revealed a "reassuring picture of resilience" across bulk annuity insurers.

Mercer UK head of risk transfer, Andy Ward, said that the findings show that the UK bulk annuity market remains strong and resilient, providing reassurance for pension schemes considering insurance solutions, as well as those who have already moved to insurance.
 
This was echoed by Aon risk head of insurer due diligence, Sam Matto-Willey, who said that the insurer-specific results demonstrated a "good degree of financial resilience" across in-scope insurers, estimated to cover over 90 per cent of annuity liabilities in the sector.

However, Matto-Willey said that the insurer-level results also particularly demonstrate the diversity of firms in the market, for example, in relation to investment strategy.

"This reinforces the value to trustees and sponsors of informed due diligence advice, that analyses these differences, to support decision-making," he stated.

However, Aon insurer due diligence specialist, Lizzie Hawkins, warned against drawing quick conclusions from the results.

"The nuances and limitations of the LIST exercise meant that we were not surprised to see some insurers seeming to fare better than others," she stated.

“It is important to understand that insurers manage their capital position in the wider context of their business, including wider group support, other lines of business such as with-profits funds, and relying on management actions, which may not have been fully reflected under the parameters of LIST."

Hawkins explained that, viewed simplistically, the apparent impact of the stresses on an insurer also depends on their starting solvency positions – which varied significantly at end 2024, from approximately 140 per cent - 270 per cent.

"Insurers starting from a higher initial position have generally seen a larger fall in solvency coverage – this is somewhat inevitable from the nature of the solvency coverage calculation," she explained.

“Trustees and sponsors should consider today’s results as a useful additional tool for understanding the risks an insurer faces, but remember that this should only be one aspect of a wider insurer assessment.”

This was echoed by Cardano director, Michael Luo, who said that trustees and corporates should now focus on forming a considered understanding of LIST and identifying any gaps.

"They should use the learnings from LIST, alongside other factors, to help them make more informed choices when picking an insurer," he stated.

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