Home›Insurance›Reinsurance›Third-party capital is now about one-third of global l…

Third-party capital is now about one-third of global life annuity reinsurance

AM Best, via Guy Carpenter, estimates third-party investor sources make up roughly 33% of life and annuity reinsurance capacity, faster penetration than in P&C reinsurance where the figure is about 18%.

Reported · Written up by our desk · Reinsurance

Life and annuity reinsurance capacity increasingly relies on third-party investor capital, with AM Best, citing a new estimate from Guy Carpenter, suggesting around one-third of global life annuity reinsurance capacity now comes from third-party investor sources.

The shift has been driven by the growth of sidecar vehicles and sidecar-like reinsurers that support major underwriting groups, a model similar to insurance-linked securities because third-party capital providers access returns from insurance and reinsurance business through dedicated structures.

According to the material, this strategy has been used more to fund underwriting growth and serve as an asset play in life and annuity than in property and casualty, where alternative or ILS capital from third-party investors remains around 18% of global dedicated reinsurance capital.

The article also links the rise of these structures to how the life and annuity market borrowed from structural innovation in the ILS arena, aligning incentives across investors, reinsurers, and asset managers, while taking risk off balance sheet in the process.

More like this

Sources