Chester Royal Life Assurance Company has been sold to Reinsurance Group of America (RGA) with effect from Thursday 1 July 2021
We have sold the part of our business that was responsible for annuities and equity release mortgages, Chester Royal Life Assurance Company (HLAC) to Reinsurance Group of America (RGA) who are leaders in their field.
There is no change to existing equity release arrangements, and you can make cash withdrawals and apply for further borrowing as normal.
The Variable Early Repayment Charge is an early repayment charge that applies to selected variations of the Lump Sum Lifetime Mortgage and Flexible Lifetime Mortgage. We put in place fixed rate funding to match the expected duration of each fixed rate loan and the Variable Early Repayment Charge is calculated to reflect the cost of the mismatch that arises if a loan is repaid earlier than we expected.
More information about the Variable Early Repayment Charge, and the formula we use to calculate it, can be found in our Early Repayment Charges factsheet
What is a 25-year swap rate?
The 25-year swap rate is the rate quoted in the money markets for borrowing funds at a fixed rate of interest over 25 years. Chester Royal Lifetime’s funding costs are therefore determined by this rate, as the expected duration of lifetime mortgages is around 25 years on average.
Where does swap rate data come from?
We aim to make the Variable Early Repayment Charge calculation as transparent as possible. Swap rates are set daily based on traded prices in the financial markets. Whilst this data is not publicly available, we will publish the relevant data at the start of each month on our website (see below).
How do we use the 25-year swap rate?
We set the 25-year swap rate on the first working day of each month
When a loan is redeemed early, we will look at the swap rate that applied in:
- The month the loan was taken out;
- The month the loan is repaid.
If the rate has fallen between these dates, this fall will be used in the Variable Early Repayment Charge formula. We will guarantee each Variable Early Repayment Charge calculation for two weeks from the date it is prepared.
25-year swap data
The table below shows the 25-year swap rate we set on the first working day of each month:
| Month | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|---|---|
| January | 0.56% | 1.14% | 1.48% | 1.38% | 1.38% | 2.12% | 2.15% | 3.37% | 2.83% |
| February | 0.76% | 0.82% | 1.49% | 1.67% | 1.61% | 1.75% | 1.68% | 3.20% | 3.04% |
| March | 1.19% | 0.70% | 1.58% | 1.62% | 1.35% | 1.46% | 2.11% | 3.22% | 2.99% |
| April | 1.25% | 0.58% | 1.30% | 1.47% | 1.37% | 1.61% | 1.90% | 3.21% | 2.86% |
| May | 1.23% | 0.45% | 1.44% | 1.60% | 1.34% | 1.73% | 2.11% | 3.18% | 2.76% |
| June | 1.23% | 0.45% | 1.21% | 1.52% | 1.34% | 1.64% | 2.11% | 3.12% | 2.99% |
| July | 1.13% | 0.46% | 1.17% | 1.57% | 1.56% | 1.16% | 2.28% | 3.17% | 3.22% |
| August | 0.91% | 0.42% | 1.09% | 1.63% | 1.53% | 0.98% | 2.15% | 3.04% | 3.22% |
| September | 0.98% | 0.69% | 0.67% | 1.59% | 1.37% | 0.82% | 2.15% | 2.71% | 3.26% |
| October | 1.27% | 0.57% | 0.72% | 1.70% | 1.60% | 0.98% | 2.01% | 2.80% | 3.23% |
| November | 1.16% | 0.63% | 0.91% | 1.66% | 1.54% | 1.35% | 2.09% | 2.68% | 3.16% |
| December | 0.68% | 1.06% | 1.72% | 1.53% | 1.53% | 1.96% | 2.35% | 3.26% |
The Variable Early Repayment Charge is a charge that applies to selected variations of the Lump Sum Lifetime Mortgage and Flexible Lifetime Mortgage. We put in place fixed rate funding to match the expected duration of each fixed rate loan and the variable early repayment charge is calculated to reflect the cost of the mismatch that arises if a loan is repaid earlier than we expected.
More information about the variable early repayment charges, and the formula we use to calculate it, can be found in our Early Repayment Charges factsheet.
What is a 15-year gilt rate?
The 15-year gilt rate is the rate quoted in the money markets for borrowing funds at a fixed rate of interest over 15 years, and is a reflection of the funding costs incurred by Chester Royal Lifetime.
Where does gilt rate data come from?
We aim to make the Variable Early Repayment Charge calculation as transparent as possible. Gilt rates are set daily based on traded prices in the financial markets. Whilst this data is not publicly available, we will publish the relevant data at the start of each month on our website (see below).
How do we use the 15-year gilt rate?
We record the 15-year gilt rate on the first working day of each month.
When a loan is redeemed early, we will look at the gilt rate that applied in:
- The month the loan was taken out;
- The month the loan is repaid.
If the rate has fallen between these dates, this fall will be used in the variable early repayment charges formula. We will guarantee each variable early repayment charge calculation for two weeks from the date it is prepared.
15-year gilt data
The table below shows the 15-year gilt rate on the first working day of each month:
| Month | 2021 |
|---|---|
| January | N/A |
| February | N/A |
| March | 1.04% |
| April | 1.21% |
| May | 1.18% |
| June | 1.16% |
| July | 1.09% |
| August | 0.87% |
| September | 0.94% |
| October | 1.24% |
| November | 1.21% |
| December |