is. certainly it does have to do partly with history. the emergence of the city owed a good deal to britain ’ s earlier position as the world ’ s leading industrial and trading nation and international power. but that does not explain its continuing strength. to explain that there are lots of factors one might point to - the english language, the european time zone, the sheer momentum of the city ’ s critical mass, supported by the availability of a professionally - qualified and technically - skilled work force which gives the city remarkable resilience and flexibility, aspects of our commercial and physical infrastructure, and so on. all of these factors are certainly relevant factors. but if i had to identify one factor above all that helped to explain the continuing phenomenon of the city, it would be what i can only rather vaguely describe as the surrounding ethos of a free, competitive, market place. i do not at all mean by that that the city is a lawless jungle where anything goes! in fact quite the reverse. you cannot have an effective competitive market without reasonably clear rules of the game, both to protect society as a whole from disruption and to retain the confidence of both the providers and users of the market by ensuring that they know what is expected of them and what they can reasonably expect of others. the evolving legal and regulatory framework in this country, together with the self - regulatory disciplines applied by the relevant market organisations and professional bodies have been - and remain - a vitally important asset for the city in this context. it is not just the structure of these arrangements but their substance and the manner of application of the rules of the game that matters. it is all too easy to err on either side. the rules may be so loosely drawn that market participants and market users lose confidence and go elsewhere ; or they may be so tightly drawn that they discourage competition and inhibit innovation. equally, the actual, as distinct from the intended, balance between social protection and fairness on the one hand, and competition on the other, may be affected by the approach adopted by the various arbitrators. theirs is a difficult job at the best of times. we ’ ve all seen matches ruined by either unduly lax or unduly officious refereeing. but ultimately the character of the game depends upon the self - discipline, as well as the skills, of the players. in general i believe that we in this country have been well served in these respects. there has been relatively little systemic disturbance in

longevity swap transactions ( £ billion ) since 2010 source : lane clark & peacock chart 2 : projected bulk annuity demand source : hymans robertson – risk transfer report 2022 demand is expected to ramp up as the majority of over £2 trillion of defined benefit liabilities looks to find a home in the insurance market over the next 20 or so years. projected demand averages c. £50bn per annum over the next 10 years, compared to a record £44bn in 2019. chart 3 : assets held in insurance firms ’ matching adjustment ( ma ) portfolios at year - end 2020 ( £ billion ) source : pra analysis of matching adjustment ( ma ) asset & liability data submissions by firms as at year - end 2020. chart 4 : matching adjustment ( ma ) benefit by asset class at year - end 2020 ( basis points ) source : pra analysis of matching adjustment ( ma ) asset & liability data submissions by firms as at year - end 2020. ranked by spread in basis points ( lowest to highest ) and does not show asset classes where there are limited holdings across the industry. chart 5 : matching adjustment ( ma ) versus market value source : pra analysis of matching adjustment ( ma ) asset & liability data submissions by firms as at year - end 2020. note : assets shown are those in component a of insurance firms ’ matching adjustment ( ma ) portfolios only. see paragraph 4. 5 of supervisory statement 7 / 18 for further details. 1. solvency ii 2. supervisory statement 1 / 20 solvency ii : prudent person principle, section 2. 3 ( ss1 / 20 solvency ii : prudent person principle ( bankofengland. co. uk ) ) 3. pra calculations using annual returns data for year - end 2014 and matching adjustment ( ma ) asset & liability data submissions by firms as at year - end 2020. 4. this refers only to assets in component a of firms ’ ma portfolios. see paragraph 4. 5 of supervisory statement 7 / 18 for a definition of component a. ( supervisory statement 7 / 18'solvency ii : matching adjustment'( bankofengland. co. uk ) ) 5. solvency ii review : matching adjustment and reforms to the fundamental spread 6. pra discussion paper 2 / 22 ( dp2 / 22 – potential reforms to risk margin and matching adjustment within solvency ii | bank of england )