|Copyright:||Copyright Business Wire 2010|
|Source:||Business Wire, Inc.|
- Reinsurers accept relatively modest volumes of annuity business and separate account products, leaving them less pressured for investment yield; hence they are less exposed to riskier asset classes and less affected by low interest rates.
- In the post financial crisis environment, once scarce capital again has become available to fund certain market opportunities, but the new companies are more focused on the annuity market and are funded primarily by private equity.
- Given pent-up demand from direct writers seeking capital relief, especially in annuities, A.M. Best expects start-up activity to be focused here rather than in traditional life/mortality reinsurance.
- The life retrocession market is highly concentrated and capital intensive, and with many companies retaining more business, the longer term prospects for life retrocession are less attractive.
- Direct writers’ access to capital markets has improved, but other sources of capital relief and financial solutions, traditionally provided by the capital and credit markets, remain very tight.
- While A.M. Best believes demand remains high for capital solutions, including surplus relief, reinsurers have retrenched, which may lead to increased pricing on certain risks.
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