{"id":724,"date":"2025-08-28T11:00:19","date_gmt":"2025-08-28T11:00:19","guid":{"rendered":"http:\/\/www.abundantlifeenergy.org\/?p=724"},"modified":"2025-08-28T15:40:54","modified_gmt":"2025-08-28T15:40:54","slug":"reinsurance-growing-as-a-strategic-capital-and-risk-management-tool-am-best","status":"publish","type":"post","link":"http:\/\/www.abundantlifeenergy.org\/index.php\/2025\/08\/28\/reinsurance-growing-as-a-strategic-capital-and-risk-management-tool-am-best\/","title":{"rendered":"Reinsurance growing as a strategic capital and risk management tool: AM Best"},"content":{"rendered":"

US life and annuity (L&A) insurers are increasingly turning to reinsurance as a strategic capital and risk management tool, with leverage ratios climbing steadily over the past decade, according to a new report from AM Best.<\/p>\n

\"am-best-logo\"In a new report, the rating agency noted that reinsurance leverage for the US L&A industry reached approximately 328% at year-end 2024, up around seven percentage points from the previous year.<\/p>\n

AM Best explained that this trend has been driven by \u201cthe higher interest rate environment fueling annuity growth that is heavily reinsured offshore,\u201d particularly in Bermuda and the Cayman Islands.<\/p>\n

These jurisdictions have reportedly gained popularity due to \u201cthe stable economic environment and regulatory landscape, as well as political stability, access to legal and financial talent, and flexible accounting regimes.\u201d<\/p>\n

According to AM Best, the ability of offshore reinsurers to choose between regulatory reporting frameworks, ranging from US GAAP to IFRS 17, local statutory requirements, or BCAR, has also made these markets attractive.<\/p>\n

\n
\n

\"Register<\/a><!–\"Download<\/a>–><\/p>\n<\/div>\n<\/div>\n

This flexibility can result in cedents taking reserve credits that diverge from the reserves held by the reinsurers themselves. AM Best stressed that the increased use of reinsurance persists across both rising and declining yield environments, underscoring its durability as a capital management tool.<\/p>\n

However, the report also emphasised the importance of robust enterprise risk management (ERM) frameworks, particularly as carriers grapple with asset-liability mismatches and product risks through different underwriting and interest rate cycles.<\/p>\n

AM Best said competition for capital solutions has intensified alongside the \u201csubstantial growth in the US annuity market,\u201d with private equity-backed insurers and investment managers increasingly leveraging offshore reinsurance, sidecars, and asset-intensive transactions to boost capital efficiency.<\/p>\n

It also flagged activity in longevity swaps and retrocession strategies, noting that \u201cthe offshore reinsurance model continues to be profitable,\u201d while warning of concerns tied to rapid growth and evolving regulation.<\/p>\n

AM Best stated it is \u201ccontinuously monitoring concerns over the transparency of capital adequacy, composition of investments, and, most of all, maintaining financial stability while protecting policyholders.\u201d<\/p>\n

\u201cAM Best will continue to evaluate the emerging trend in reinsurance,\u201d the agency concluded, \u201cwith a much greater focus on how transactions will be structured.\u201d<\/p>\n

The post Reinsurance growing as a strategic capital and risk management tool: AM Best<\/a> appeared first on ReinsuranceNe.ws<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

US life and annuity (L&A) insurers are increasingly turning to reinsurance as a strategic capital and risk management tool, with leverage ratios climbing steadily over the past decade, according to a new report from AM Best. In a new report, the rating agency noted that reinsurance leverage for the US […]<\/p>\n","protected":false},"author":1,"featured_media":726,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-724","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insur-linked-securities"],"_links":{"self":[{"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/posts\/724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/comments?post=724"}],"version-history":[{"count":3,"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/posts\/724\/revisions"}],"predecessor-version":[{"id":728,"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/posts\/724\/revisions\/728"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/media\/726"}],"wp:attachment":[{"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/media?parent=724"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/categories?post=724"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.abundantlifeenergy.org\/index.php\/wp-json\/wp\/v2\/tags?post=724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}