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Business Wire
2 days ago
- Business
- Business Wire
Best's Special Report: Bermuda Remains the Largest Offshore Life/Annuity Reinsurance Domicile
BUSINESS WIRE)--Bermuda continues to maintain its role as a driving force in offshore reinsurance, accounting for more than 40% of total ceded reserves for U.S. life-annuity writers in 2024, according to a new AM Best report. The newly issued Best's Special Report, titled 'Bermuda Remains the Largest Offshore Life/Annuity Reinsurance Domicile,' also notes that the island nation accounted for over 60% of reserves ceded for L/A transactions effective in 2023 and 2024. However, the growth in ceded reserves from U.S. L/A insurers slowed to 6.4% in 2024, compared with over 10% growth in each of the previous three years. 'Bermuda has a long history of reinsurance regulator accessibility, along with solid networks of legal, actuarial and accounting expertise,' said Jason Hopper, associate director, AM Best. 'Capital efficiency tends to be cited as the primary business rationale for using offshore reinsurance.' The report cites the aging U.S. population and higher interest rates as drivers in the strong annuity growth over the past two plus years. While the growth tapered off in 2024, it is expected to continue, and more companies may look to reinsurers to manage growth and capital levels. Affiliated offshore reinsurance can provide country- risk diversification and capital-efficiency, which supports balance sheet growth. Yet it can also provide accounting and tax benefits. 'However, cross-border reinsurance introduces operational complexity and opaqueness, which may complicate analysis,' said Jacob Conner, associate analyst, AM Best. According to the report, nearly 70% of reserves ceded offshore go to affiliates. Companies with asset manager/private equity sponsors comprise 46% of reserves ceded to offshore affiliates. The report also includes data on U.S. life/annuity insurers, detailing the highest share of in-force ceded reserves offshore affiliates, a breakdown of in-force reserves assumed by region and a ranking of the largest reinsurance transactions for ceded reserves in 2024. To access the full copy of this special report, please visit
Business Wire
24-04-2025
- Business
- Business Wire
Best's Special Report: Secondary Perils Continue to Spike Insurer Loss Ratios, Even in Less Catastrophe-Prone States
BUSINESS WIRE)-- AM Best data shows that nearly half of all U.S. states saw its highest single-year property catastrophe loss ratio in the last 10 years exceed its 10-year median loss ratio by more than 20 percentage points. While many of these states are prone to catastrophe losses, according to a new AM Best report, the rising frequency of secondary perils in states considered to be less-catastrophe prone have led insurers to ramp up reassessments of their pricing models, underwriting strategies and risk management approaches. The rising frequency of secondary perils in states considered to be less-catastrophe prone have led insurers to ramp up reassessments of their pricing models, underwriting strategies and risk management approaches. Share Secondary perils have become a major cause of loss in the past five years for U.S. property/casualty insurers with property catastrophe-exposed lines of business, highlighted by the January wildfires in California. In its Best's Special Report, 'US Weather Event Risks Highlight Need for Stress Testing,' AM Best states that insurers will need to stress test for these threats regularly as risk profiles evolve. Stress tests are conducted and factored in AM Best's credit rating process, as part of the balance sheet and enterprise risk management assessments. 'Stress testing should consider risk appetite and tolerance, as well as net exposure, the impact from multiple events, liquidity and reinsurance structure and dependence,' said Jason Hopper, associate director, Industry Research and Analytics. 'Understanding true exposures and considering all plausible scenarios is important. With the availability of aggregate reinsurance protection limited, some carriers have been severely impacted by the aggregation effects of multiple, smaller events.' The report notes that there were 27 one-billion-dollar weather events in 2024, and 28 in 2023 (despite there being no NOAA-named hurricane), compared with an average of 15 events in 2010-2022. While national insurers have accounted for an overwhelming majority of direct losses paid, single-state and regional companies tend to have a greater share of claims compared with their premiums in some states, with Kentucky being the highest in 2023 at nearly 25% of direct losses paid in the state while having 18% in market share based on direct premiums. The greater share of claims than premiums indicates higher concentration risk for these carriers. 'Market disruptions continue as some of the national carriers curb their risk appetites, creating opportunities for single-state and regional writers,' said Jacob Conner, associate analyst, AM Best. 'However, the operating loss-drag on capital and surplus over the last 10 years has been worse for single-state and regional writers in catastrophe-prone states, and so stress testing helps companies determine the strength of the balance sheet and ability to absorb shocks.' To access the full copy of this special report, please visit
Yahoo
24-04-2025
- Business
- Yahoo
Best's Special Report: Secondary Perils Continue to Spike Insurer Loss Ratios, Even in Less Catastrophe-Prone States
OLDWICK, N.J., April 24, 2025--(BUSINESS WIRE)--AM Best data shows that nearly half of all U.S. states saw its highest single-year property catastrophe loss ratio in the last 10 years exceed its 10-year median loss ratio by more than 20 percentage points. While many of these states are prone to catastrophe losses, according to a new AM Best report, the rising frequency of secondary perils in states considered to be less-catastrophe prone have led insurers to ramp up reassessments of their pricing models, underwriting strategies and risk management approaches. Secondary perils have become a major cause of loss in the past five years for U.S. property/casualty insurers with property catastrophe-exposed lines of business, highlighted by the January wildfires in California. In its Best's Special Report, "US Weather Event Risks Highlight Need for Stress Testing," AM Best states that insurers will need to stress test for these threats regularly as risk profiles evolve. Stress tests are conducted and factored in AM Best's credit rating process, as part of the balance sheet and enterprise risk management assessments. "Stress testing should consider risk appetite and tolerance, as well as net exposure, the impact from multiple events, liquidity and reinsurance structure and dependence," said Jason Hopper, associate director, Industry Research and Analytics. "Understanding true exposures and considering all plausible scenarios is important. With the availability of aggregate reinsurance protection limited, some carriers have been severely impacted by the aggregation effects of multiple, smaller events." The report notes that there were 27 one-billion-dollar weather events in 2024, and 28 in 2023 (despite there being no NOAA-named hurricane), compared with an average of 15 events in 2010-2022. While national insurers have accounted for an overwhelming majority of direct losses paid, single-state and regional companies tend to have a greater share of claims compared with their premiums in some states, with Kentucky being the highest in 2023 at nearly 25% of direct losses paid in the state while having 18% in market share based on direct premiums. The greater share of claims than premiums indicates higher concentration risk for these carriers. "Market disruptions continue as some of the national carriers curb their risk appetites, creating opportunities for single-state and regional writers," said Jacob Conner, associate analyst, AM Best. "However, the operating loss-drag on capital and surplus over the last 10 years has been worse for single-state and regional writers in catastrophe-prone states, and so stress testing helps companies determine the strength of the balance sheet and ability to absorb shocks." To access the full copy of this special report, please visit 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 Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED. View source version on Contacts Jason Hopper Associate Director, Industry Research and Analytics +1 908 882 1896 Jacob Conner Associate Analyst +1 908 882 2465 Christopher Sharkey Associate Director, Public Relations +1 908 882 2310 Al Slavin Senior Public Relations Specialist +1 908 882 2318 Sign in to access your portfolio
Yahoo
03-04-2025
- Business
- Yahoo
Best's Special Report: U.S. Life/Annuity Insurers Increased Bond Purchases in 2024; Mortgages and Alternative Assets Investment Growth Muted
OLDWICK, N.J., April 03, 2025--(BUSINESS WIRE)--U.S. life/annuity (L/A) insurers allocated a higher share of new investment purchases toward bonds over mortgages and alternative assets through the first three quarters of 2024, when compared with the prior two years, according to a new AM Best report. The Best's Special Report, "NAIC-2 Bond Purchases Climb in 2024; Mortgages and Alternatives Muted," notes that reinvestment of cash flows by L/A insurers into higher yielding bonds and mortgages drove net investment income by more than 8% year over year through the third quarter of 2024. "Insurers continue to invest in private credit and asset-backed securities," said Jason Hopper, associate director, AM Best. "This in turn increases the focus on liquidity, capacity, and the continued appetite for this asset class, as well as the underwriting and due diligence of asset managers." According to the report, the quality of bond portfolios within the segment remains high and largely investment grade. More than 30% of newly purchased bonds in the third quarter of 2024 were rated NAIC-2, up nearly twofold from 16% in 2020, and marking the highest level in five years. The influx of NAIC-2 rated debentures has played a role by creating a supply side issue. "This increased supply of bond issues has lowered prices, making them more appealing to insurance companies looking for value in a competitive market and more attractive on a relative basis," said Jacob Conner, associate analyst, AM Best. Among the report's other highlights: Mortgage loans accounted for 11% of all investment acquisitions as of third quarter 2024, with new acquisitions being fueled largely by residential properties; Insurers have been adjusting to downward pressure facing office properties since the COVID-19 pandemic, limiting new purchases and shrinking the allocation to this property type, favoring other property types with more attractive characteristics; Approximately 15% of alternative assets acquired by L/A companies through the third quarter of 2024 were private equity investments, significantly lower than its year-end 2023 allocation of over 45%; To access the full copy of this special report, please visit To view a related video on the report featuring Jason Hopper and Jacob Conner, please visit 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 Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED. View source version on Contacts Jason Hopper Associate Director, Industry Research and Analytics +1 908 882 1896 Jacob Conner Associate Analyst +1 908 882 2465 Christopher Sharkey Associate Director, Public Relations +1 908 882 2310 Al Slavin Senior Public Relations Specialist +1 908 882 2318 Sign in to access your portfolio
