Matching adjustment

The matching adjustment permits an insurer with predictable long-term liabilities and a qualifying asset portfolio to add part of the asset spread to the discount rate used for those liabilities. The amount reflects a deduction for expected credit losses and downgrade risk, commonly described through the fundamental spread. Eligibility, cash-flow matching and governance determine whether the adjustment is available.

This section covers matching-adjustment assets, regulatory policy, insurer disclosures and the investment structures used in annuity and other long-term business. It follows both Solvency UK and the European framework where the distinction affects an insurer’s portfolio. The linked volatility-adjustment histories provide a separate monthly view of the regulatory adjustment applied to eligible liability discount rates in sterling and euro. Each article is published in its relevant market context, whether the immediate subject is an asset, a transaction, a policy change or a firm’s capital disclosure. The page separates that coverage from more general investment commentary.