CGF Analysis: APRA Releases Response on Longevity Product Capital Reforms
Paid members, you can also go through directly to company page "https://www.alphainsights.com.au/research/cgf/".
A culling of non-paying membership will happen across the weekend. With the growing interest in membership of late, the limited spots will need to get recycled :( Sorry in advance!!
Also, some developing interests for the product by commercial providers. Exciting times.
Alrighty, have a good weekend. This week's key takeaway is going defensive at a portfolio level. And many downgrades has been coming through lately. Sign of the times.
Event: APRA Releases Response on Longevity Product Capital Reforms | Date: 2025-10-29 | Source: Challenger Market Announcements
APRA Finalises Capital Framework Refinements for Annuities
On 29 October 2025, the Australian Prudential Regulation Authority (APRA) released its response to submissions on proposed changes to the capital framework for longevity products, refining adjustments first consulted in June 2025. The updates address prudential framework issues, including capital treatment of annuities, aiming to enhance balance sheet resilience and promote product innovation while reducing procyclicality. Key refinements include a 10-15% reduction in capital requirements for life insurers, with implementation targeted for mid-2026. Challenger welcomed the announcement, noting it enables greater capital efficiency and supports sustainable retirement income solutions. For details, see the APRA response via Challenger's market updates.
This confirmation builds on prior consultations, with APRA incorporating industry feedback to balance risk management and market growth. No major surprises emerged, aligning with expectations for annuity providers like Challenger, which holds 60% market share.