MAIA unleashed: The PRA’s bold move to accelerate productive investment growth

15 April 2025

2 minute read

Following discussions with industry leaders and the Association of British Insurers (ABI), the Prudential Regulation Authority (PRA) has announced a consultation to cut regulation on UK insurers looking to expand their investment options for matching adjustment (MA) portfolios and unleash over £100bn into productive assets.

Most UK life insurers already have approval to utilise a MA to minimise the regulatory capital burden on backing annuity contracts; now the PRA has shown an intention, through tangible action, to go even further to meet a governmental drive for sustainable, productive investment.

Introducing the MAIA

The reforms, branded the Matching Adjustment Investment Accelerator (MAIA), intend to streamline the approval process for insurers to integrate assets with more unusual features into MA portfolios by permitting an eligibility self-assessment, in advance of seeking formal retrospective approval from the PRA within a 24-month window.

As the consultation paper (CP7/25) is only requesting industry input until the 4 June 2025, positive change could be realised by the end of the year. The PRA hopes to implement the reforms by Q4 2025.

You can learn more about the MAIA framework by reading our initial overview.

How will this impact insurers?

Daniel Gill, 4most Client Partner, gives his thoughts on how this will impact insurers and the UK insurance industry.

“Although this news will be welcomed by insurers, there is still more the PRA can do to help insurers invest in productive assets by setting out explicitly what can be included in a wider MA eligible scope.

Some assets which could boost growth and/or help to meet sustainability aims are difficult to include inside MA portfolios due to the regulatory burden. Unless more tailored guidance is provided, this may continue to make them unattractive to insurers and consequently, slow down the benefits of Solvency UK reforms. In our view, the MAIA is a positive step forward, yet further clarity is needed to set the boundaries of eligible assets. If this doesn’t happen in the foreseeable future, it could be a missed opportunity to realise the full benefits from increased MA investment choice.

Despite this, the MAIA should lead to quicker investment decisions into a range of assets which could generate higher returns and advance the governments growth agenda.

There is a possibility that the PRA could retrospectively refuse applications to treat these as MA eligible, but providing insurers can show these assets meet the relevant criteria, the proposals will make it easier for insurers to invest in certain assets that they are currently unable, or unwilling, to do.

This is especially the case where firms fully utilise the limited allowance of the MAIA scope (e.g. a pre-defined 5% of MA BEL) to gain approval for assets with novel features, successfully gain retrospective approval, and then receive a refreshed MAIA allowance. This refreshed MAIA allowance can then be reused for an even wider pool of assets because any new assets approved for MA portfolio inclusion will subsequently no longer count to the limited maximum allowance.

Overall, this should only increase the array of assets on offer to MA life insurers and benefit a UK economy in urgent need of productive investment to stimulate growth.”