Commentary & Opinion

U.S. Life Insurers' Bermuda Reinsurance Exposure

There are benefits and risks to U.S. life insurers’ growing dependence on Bermuda reinsurance

ALIRT Insurance Research discusses the growing utilization of Bermuda reinsurance by U.S. Life/Annuity Insurers. For a copy of the full report, please contact ALIRT at info@alirtresearch.com.

WINDSOR, Conn., Oct. 20, 2022 /PRNewswire/ — In recent years the amount of U.S. life and annuity reserves ceded to Bermuda-based reinsurers has surged, equaling one third of total cessions in 2021. This growth has corresponded with a flurry of new life reinsurers established in Bermuda over the past five years, with the majority tied to private-investment firms.

These and other findings are detailed in ALIRT’s recent white paper, U.S. Life Insurers’ Bermuda Reinsurance Exposure, in which ALIRT discusses the reasons for this growth, maps out the relative market share of the largest Bermuda reinsurers, highlights new entrants to the market (including the largest transactions in 2021 and through mid-year 2022), and reveals which U.S. life insurers have the largest exposures to their Bermuda reinsurance counterparties as of year-end 2021.

The growing transfer of U.S. annuity reserves into the Bermuda reinsurance market has raised concerns among certain distributors and legislators/regulators who feel that such transactions could compromise the financial strength of domestic cedents. ALIRT addresses these concerns, detailing both the benefits and potential risks of these reinsurance relationships and concludes that this U.S.-Bermuda reinsurance nexus is likely poised to grow.

 

 

 

About ALIRT Insurance Research
ALIRT Insurance Research models the financial performance trends of life, health, and property & casualty insurers versus their peers and respective insurance industry sectors. This work is used by ALIRT’s clients to meet due diligence, competitive intelligence, and sales/marketing needs. With over 20 years of experience, long-time insurance market relationships, and an emphasis on service, ALIRT helps its customers go beyond ratings and financial data to enhance and strengthen their insurance carrier oversight efforts.