Regulators are paying greater attention to structures involving asset managers and offshore entities.
AM Best has maintained a stable outlook on the global life reinsurance segment, citing solid underwriting, investment returns and strong capitalisation amongst major players.
In its Best’s Market Segment Report, “Market Segment Outlook—Global Life Reinsurance,” AM Best said the market remains concentrated, with a small number of global reinsurers holding most of the market share.
The number of offshore annuity reinsurers has grown in recent years, alongside greater use of offshore entities by existing players.
These companies have mainly focused on asset-intensive reinsurance and block transactions involving legacy annuity books.
Private equity firms and asset managers are also becoming more active in life reinsurance, adding to competitive pressure in the market.
“Private equity/asset managers have been increasingly getting involved in the life reinsurance space and adding to the growing competitive pressures,” said Edward Kohlberg, director at AM Best. “This has brought an increased focus on the regulations that oversee these new formations.”
AM Best said financial performance across the segment has remained strong, supported by solid underwriting and favourable investment yields.
Operating scale, together with technical, actuarial and risk management expertise, is expected to support further growth.
Mortality levels have stabilised in recent quarters, although the industry is monitoring the potential impact of glucagon-like peptide-1 (GLP-1) drugs on mortality and morbidity outcomes.
The segment also benefits from a stable regulatory environment, particularly in the US and Europe, where most leading global life reinsurers operate.
AM Best said it continues to monitor regulatory changes in offshore jurisdictions.