LONDON, April 27 (Reuters) - The Bank of England warned insurers on Thursday not over extend themselves in grabbing more business from pension schemes eager to offload risks.
Charlotte Gerken, executive director for insurance supervision at the Bank, said that in the face of considerable temptation to capture business opportunities, insurers need to exercise caution.
Bulk purchase annuities (BPA) are long-term policies from life insurers for company defined benefit, or final salary, pension schemes.
UK life insurers could take on more than 500 billion pounds ($623.70 billion) of pension liabilities over the coming decade, she said.
"Insurers therefore need to understand, as they take on these vast sums of assets and liabilities, how they may become greater sources or amplifiers of liquidity risk," Gerken said.