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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Best’s Market Segment Report: Global Life/Annuity Reinsurers’ Capital Management Strategies Evolve to Achieve Target Returns, Meet Needs of Cedents

Flourishing annuity sales, using reinsurance as a capital management strategy and rising competition from new market entrants continue to drive activity in the global life/annuity reinsurance segment, according to a new AM Best report.

The Best’s Market Segment Report, “Global Life/Annuity Reinsurers’ Capital Management Strategies Evolve to Achieve Target Returns and Meet the Needs of Cedents,” is part of AM Best’s look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo. Other reports, including AM Best’s ranking of top global reinsurance groups and in-depth looks at the insurance-linked securities, Lloyd’s, health and regional reinsurance markets, will be available during August and September.

According to this report, AM Best continues to observe an increase in reinsurance leverage by U.S. cedents, which is partly driven by offshore transactions. Bermuda, and to a lesser extent, the Cayman Islands, have gained popularity amid increased demand for retirement solutions and reinsurance as a capital and risk management tool. The reinsurance leverage ratio for the U.S. life/annuity industry ended 2024 at 328%, compared with nearly 200% a decade earlier, a trend pointing to the growing use of third-party reinsurance by U.S.-domiciled carriers relative to their capital and surplus.

“With higher interest rates driving robust annuity growth in the past few years, the amount of annuity reserves has expanded by more than 10% in each of the last four years, and ceded reserves have doubled from 2016 to 2024,” said Edward Kohlberg, director, AM Best. “The notable annuity growth is likely to continue, and more companies may look to reinsurers to manage growth and capital levels.”

The report notes that reinsurers face several investment risks, as their perception of managing these risks is always evolving, especially with increased immersion of private equity-backed reinsurers and asset managers. Reinsurers owned by asset managers are more comfortable taking investment risks, utilizing investment experience from their parent companies in structured products, mortgages, private credit or other alternatives.

“As the offshore reinsurance model continues to be profitable, there remain concerns due to the rapid growth and evolving regulatory scrutiny,” said Stratos Laskarides, senior financial analyst, AM Best. “At the same time, and despite annuities being a very capital-intensive product, asset managers have thus far supported the rapid growth by providing the needed capital and not constraining growth with material dividends.”

AM Best expects the growing competition for capital solutions, the increased complexity of products and the use of reinsurance as a strategic capital management tool to persist.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=357168.

A video discussion of this report also is available at http://www.ambest.com/v.asp?v=ambgrlife825.

For global reinsurance reports ahead of Rendez-Vous de Septembre, as well as video coverage of the event, please visit AM Best’s Reinsurance Information center.

Lastly, AM Best will host its annual reinsurance market briefing at Rendez-Vous de Septembre on Sept. 7, 2025, at 10:15 a.m. (CEST) in Monte Carlo. For more information, please visit the event website.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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