Following its consultation earlier this year (CP7/25), the Prudential Regulation Authority (PRA) has published a Policy Statement (PS17/25) on the Matching Adjustment Investment Accelerator (MAIA).

This initiative seeks to enable UK insurers to capitalise more quickly on investment opportunities by removing the requirement for prior approval from the regulator before firms can claim Matching Adjustment (MA) benefits on assets with features not covered by their existing MA permission. It is hoped that this innovation will facilitate and encourage additional productive investment by insurers in the UK, for the benefit of the wider UK economy.

Background

The MA is an important mechanism under Solvency UK for life insurers. The MA allows them to take credit upfront for part of the expected investment returns of the cash flows of investment assets that are used to closely match the cash flows of certain long-term liabilities of insurers and to benefit from that part of the asset’s valuation which reflects the illiquid or long-term nature of the asset.

The MAIA framework builds on previous reforms to the MA regime, including those announced in PS10/24, which introduced flexibility to permit the inclusion of assets that do not have fixed cash flows, expanding the range of insurance business that may claim the MA and removing the restriction on the amount of MA that may be claimed from sub-investment grade assets. The introduction of the MAIA was trailed in those reforms as a potentially ‘useful future enhancement’ to support ‘safe innovation’.

Key Proposals

  • MAIA Framework:
    • The MAIA framework allows insurers to apply for a MAIA permission which, if granted, permits them to include a limited quantity of assets that are self-assessed as MA eligible in their MA portfolio without requiring PRA approval in advance for a period of 24 months. This ability is subject to the conditions of a firm’s MAIA permission and compliance with the MA eligibility conditions. These assets can include assets with highly predictable cashflows.
    • Firms are expected to apply a proportionate and risk-based approach to assessing asset eligibility. The PRA had considered in CP7/25 that it would generally be inappropriate to include assets in the MA portfolio using a MAIA permission where the assessment of MA eligibility conditions is ‘more complex’. However, in light of feedback that this would be unduly restrictive, the PRA has pared this back to an expectation that a more in-depth assessment will be undertaken for assets where greater judgment is required.
    • In the latest policy statement, the PRA also confirms that no changes to the MA attestation framework brought in under PS10/24 will be made upon implementation of the MAIA framework.
  • MAIA Permissions Process:
    • PS17/25 clarifies the position in respect of the MAIA permissions process, including that:
      • only one s138BA application is required for a MAIA permission;
      • information firms are expected to provide in support of applications. This can be found in the Matching Adjustment and Matching Adjustment Investment Accelerator Permission SoP8/24 paragraphs 2A.6 to 2A.8. These paragraphs also outline the additional information that the PRA may consider requesting from a firm seeking an initial MAIA permission;
      • the PRA does not expect the permissions process to be lengthy and proposes that authority for approval for submission of MAIA applications may be delegated from the board of a firm to a suitable sub-committee or approved senior managers; and
      • initial MAIA applications are expected to be reviewed ‘promptly’, provided sufficient information has been provided.
  • Exposure Limits: Firms will have an exposure limit based on the size of their MA portfolio. The PRA proposes that limits would be calibrated using the Best Estimate of Liabilities (BEL) of the MA portfolio, net of reinsurance, at the time of the MAIA permission and would remain fixed in monetary terms until the next variation of the MAIA permission. The PRA suggests that an appropriate MAIA exposure limit (across the whole group in aggregate) should generally be the lower of: (i) 5% of the BEL of the MA portfolio (net of reinsurance); and (ii) an amount proposed by the firm which does not exceed £2 billion. Despite pushback from firms, the PRA has signalled that £2 billion on a group-wide basis is the maximum limit it is comfortable with from a prudential risk perspective.
  • Timing: Firms will have 24 months to submit an MA application to regularise MAIA assets, during which time they can continue to benefit from the MA capital treatment in respect of such assets. Where applications are approved relevant assets would subsequently be covered by the firm’s MA permission and no longer count towards the MAIA exposure limit. If the application is not approved, a firm would be required to remove the relevant assets from the MA portfolio.
  • MAIA Policy:
    • The PRA proposed an expectation that firms specify the intended use of the MAIA permission, in line with the investment policy for assets in the MA portfolio. Following specific feedback, the regulator has removed the expectation that short-dated assets would be inappropriate for inclusion in the MA portfolio under a MAIA permission. However, the PRA has included a new expectation that a firm’s long-term strategy should not be routinely supported by assets that use MAIA permission to remain in the MA portfolio only temporarily, without ever being regularised through an MA eligibility application. The PRA expects firms to consider submitting an MA application in respect of MAIA assets that are removed from the MA portfolio or mature prior to the time limit for regularisation applying, where the firm expects to invest in assets with the same features in the future.
    • Assets will not be eligible as MAIA assets where they have previously been included in the MA portfolio using a MAIA permission and subsequently removed or where they have been included in a MA permission application that has been refused by the PRA.
    • Firms will be required to regularly complete a stress test exercise to consider the implications of all MAIA assets being determined to be ineligible (and consequently removed from the MA portfolio) and include results of this stress test exercise in their ORSA.
  • Reporting Requirements: New reporting requirements include an annual MAIA use report (to be submitted no later than 18 weeks after the firm’s financial year end) and updates to the Matching Adjustment Asset and Liability Information Return (MALIR) reporting template. The regulator expects to use such reports to understand how MAIA permissions are being used, any issues with firm’s compliance with their MAIA policies and assess the pipeline of prospective applications to regularise MAIA assets.
  • Contingency Plans:
    • The PRA is introducing a rule that firms using a MAIA permission must establish effective contingency plans for each MAIA asset, and these plans must be kept up-to-date and implemented when a firm is required to remove a MAIA asset.
    • Where the PRA determines that a MAIA asset is not MA eligible, firms’ contingency plans should not assume an ‘immediate’ sale of the asset and should cover how the firm expects to continue to invest in that asset when outside the MA portfolio in the event that it needs to be removed.
    • In PS17/25, the PRA also confirms that firms should develop their own processes for reviewing contingency plans, including determining the appropriate frequency.

Breach

The PRA proposes that if a firm breaches certain MAIA rules in the MA Part of the PRA Rulebook, such as MA eligibility conditions, exposure limits, and regularisation timescales, it must rectify the breach within two months to avoid a reduction in the MA benefit claimed.

If the firm is unable to restore compliance within this period, a 10% reduction of the MA benefit across the MA portfolio should be applied, increasing by 10 percentage points for each additional month of non-compliance. While some respondents noted the effect as disproportionate, the PRA has not changed its policy. Further, where the PRA considers that the breach indicates broader governance or risk management failures, it may instigate more serious consequences, including the potential revocation of a firm’s MAIA permission.

PS17/25 also outlines a new expectation clarifying that when a firm assesses their position against the MAIA exposure limit, they should count both the amounts already invested and any amount committed to invest. If these amounts are denominated in a different currency, firms should use the exchange rate at the time of initial investment to convert into sterling. Here, the PRA seeks to reduce the risk of passive breaches, as it is based on a fixed exchange rate. For unintended breaches of the MAIA exposure limit, the PRA expects firms to remove assets from the MA portfolio that are using the MAIA permission, to ensure that the firm returns to compliance with the MAIA exposure limit.

Consequential Impacts / Funded Reinsurance

Firms with permission to use an internal model for calculation of its Solvency Capital Requirement (SCR), would be expected to consider whether their use of the MAIA permission has implications for the level of MA benefit in the calculation of the SCR. However, the PRA does not generally expect firms to update their internal models when granted a MAIA permission.

In respect of recapture, the PRA (in a change to its original proposals) states that firms can assume recapture into the MA portfolio using its MAIA permission where the asset: (1) is collateral in an intra group reinsurance arrangement; and (2) is the same as an asset included in the firm’s MA portfolio under a MAIA permission.  

The PRA has set out expectations in section 10.8 of the updated SS7/18 that reinsurance assets (including Funded Reinsurance) are generally inappropriate for inclusion in the MA portfolio using a MAIA permission.

Next Steps

The final rules and policy material set out in PS17/25 took effect on 27 October 2025, except for the changes to the MALIR template which will be implemented from 31 December 2026. Firms could apply for a MAIA permission from 27 October 2025.

According to the PRA, as outlined in a speech from its Director of Insurance Supervision on 5 November 2025, the regulator has already had “a flurry of interest from annuity-writing firms” as they seek to take advantage of the MAIA.

To find out more about the MAIA framework, please contact our Insurance Team.