Finance
UK life insurers show resilience in Bank of England stress test
Published by Global Banking & Finance Review®
Posted on November 17, 2025
2 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on November 17, 2025
2 min readLast updated: January 21, 2026
UK life insurers have shown resilience in the Bank of England's stress test, maintaining capital requirements during severe market conditions.
LONDON (Reuters) -The Bank of England said on Monday that Britain's largest life insurers were resilient to severe market stress, as it published the results of the first stress test conducted under a new regulatory framework implemented last year.
The test aims to assess firm resilience to severe but plausible events. The Prudential Regulation Authority (PRA) said all 11 firms taking part stayed above minimum capital requirements throughout the simulated downturn.
The test modelled a deep global recession with falling interest and inflation rates, sharp declines in equity and property values, and widening credit spreads.
The exercise, run every two years, was the first under the Solvency UK framework introduced last year. For the first time, the PRA will publish individual firm results next week.
Britain's large life insurance sector includes Aviva, Legal & General and Phoenix, among others.
Unlike the BoE’s stress testing of the UK banking system, the PRA life insurance stress test is not used to set capital requirements or buffers.
(Reporting by Yadarisa Shabong in Bengaluru and Phoebe Seers in London; Editing by Mrigank Dhaniwala and Tommy Reggiori Wilkes)
Stress testing is a simulation technique used to evaluate how financial institutions can cope with extreme market conditions, assessing their resilience and ability to meet capital requirements during economic downturns.
Capital requirements are regulatory standards that determine the minimum amount of capital a financial institution must hold to absorb losses and continue operations, ensuring stability in the financial system.
The Prudential Regulation Authority (PRA) is a regulatory body in the UK responsible for overseeing banks, insurers, and investment firms to promote the safety and soundness of the financial system.
The Solvency UK framework is a regulatory regime introduced to ensure that UK insurers maintain adequate capital levels to meet their liabilities and protect policyholders in the event of financial distress.
Market stress refers to a situation where financial markets experience significant volatility or downturns, often due to economic shocks, leading to increased risk and uncertainty for financial institutions.
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