A pension protection gap inspires innovation in Bermuda life reinsurers
Life reinsurance isn’t known for its cutting-edge innovation, something panellists at the Business Development Agency Risk Summit, held in Bermuda this week, joked about during their discussion entitled ‘Innovating reinsurance, powering growth.’ But that could be starting to change.
The panel, comprised of James Claxton (pictured left), partner and principal at EY Bermuda; Julie McDonald (pictured centre), chief risk officer, Global Atlantic Re; Michelle Moloney (pictured right), EVP capital solutions at Pacific Life Re; Andrew Sooboodoo (pictured far right), chief risk officer at InEvo Re; and moderator Jamie Schmerer (pictured far left), SVP enterprise risk at Fortitude Re. They were in agreement that life reinsurance isn’t the most obvious pioneer of innovation, but a shift may be underway.
Maloney framed the shift directly. The sector has not been “revolutionary as far as innovation,” she said, but “it has been evolutionary in that I think we've continued to innovate across the entire value chain of how we bring solutions to the marketplace.”
That evolution is being driven by a fundamental market need. McDonald noted, “almost half of working households can't afford to maintain their lifestyle in retirement.” Meeting that demand requires enormous capital support. The result is a structural redesign of how risk and capital interact.
At the centre of that redesign is asset-intensive reinsurance. Paxton explained that reinsurance, which once functioned primarily as a balance sheet management tool for cedants, allowing insurers to transfer blocks of risk, has moved decisively toward partnerships between insurers and asset managers.
“Growth is being driven by that partnership model between private equity or other asset managers and the re/insurer, to really provide service back to the insurance company in pricing power. There’s a new season of thinking towards access to cheaper forms of capital or certain asset classes that can be delivered through this platform-type model,” Paxton said.
For Global Atlantic, McDonald said the value creation engine sits squarely in asset-liability management. “We really are liability-driven investors. Once you’re very upfront and clear about the liabilities and your risk appetite, it makes the investment part of it a lot easier,” she explained.
Maloney describes innovation as resting on three pillars: “Capital optimisation, risk management, and relationships and long- term commitments.” Her approach centres around “finding the right home for risk,” slicing exposures across balance sheets where they can be carried most efficiently.
In practice, this increasingly means transactions involving multiple counterparties rather than bilateral deals. As Maloney observed: “Ten years ago, it was unusual to have more than one buyer, whereas today it's unusual to not have three or four companies involved.”
That complexity reflects the growing sophistication of the capital ecosystem around life reinsurance. The result is a model where asset sourcing, capital partnerships and liability underwriting are no longer separate activities but integrated functions.
For Bermuda, the island’s role as a life reinsurance hub is no longer defined by balance sheet capacity but by the ability to assemble platforms where capital, assets and liabilities are engineered together.
The innovation may look evolutionary. But the architecture beneath it is new.
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