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December 02, 2025
Cadwalader partner Robert Cannon was featured in Alternative Credit Investor’s coverage of how Solvency II reforms are shaping insurers’ appetite for structured assets such as collateralized fund obligations (CFOs).
Robert described the UK Prudential Regulation Authority’s changes to the matching adjustment mechanism as “more of an evolution than a revolution,” adding that material impacts are likely to emerge only over the next several years. He noted that the reforms primarily benefit life insurers with longer-term liabilities, while non-life insurers will see limited effects.
He also observed that insurers will need time to assess the risk capital charges associated with CFOs and balance them against potential yield benefits. Robert said the market is adjusting by redrawing CFOs to feature extended maturities, fixed repayment schedules, longer reinvestment periods, and enhanced liquidity facilities to meet insurers’ requirements for predictable cash flows.
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