Life Re Giants Crowd Out Other Players: Moody's

A reinsurer is an entity that insures a "direct writing" insurer against the direct writer's own risk.

In the past, life reinsurers focused mainly on protecting the direct writers against "mortality risk," or the risk that flu epidemics, outbreaks of other diseases, or other tragic catastrophes could cause death rates to spike.

In recent years, life reinsurers have worked to increase sales of traditional life reinsurance to direct writers in the hot life markets in Asia and Latin America, the Moody's analysts write.

Life reinsurers are also working to increase sales of arrangements that help insurers dispose of unwanted blocks of business; "longevity risk" arrangements, or reinsurance that protects annuity issuers against the risk that annuity users will live longer than expected; and life insurance sold through automated underwriting programs and direct marketing programs.

Efforts to reinsure life insurance sold through the new automated underwriting programs and direct sales programs have helped to increase the percentage of new life business reinsured in the past few years, but, "despite the recent increase in overall cession rates, we believe there are limited growth opportunities in traditional mortality risk transfer business for life reinsurers in the U.S.," the Moody's analysts write.

Moody's posts its life insurance and reinsurance behind a paywall. The life reinsurance market comment is available here.

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