23 June 2023ArticleFeature

In for the long haul: Fortitude Re

From its beginnings as a specific vehicle for American International Group (AIG) to manage its legacy insurance portfolio, Fortitude Re has evolved into a major player in the growing legacy reinsurance market.

Nothing demonstrated that more than its $28 billion reinsurance agreement with US life insurer Lincoln National, which meant Fortitude had reinsured more than $100 billion since inception.

But Fortitude chief executive officer Alon Neches insists that despite the headline-grabbing numbers, the dollar size of the deals Fortitude has done is less important than the fact the company has been able to find solutions for its clients—and it intends to work alongside them for the long term.

That concept began before the company was even called Fortitude Re, says Neches, but much of the credit for its growth belongs to investor Carlyle, which took a stake in the business in 2018 and later backed the company when it became an independent entity.

“Our chairman Brian Schreiber and the team at Carlyle deserve a lot of credit. When Fortitude Re was formed, it was the legacy segment of AIG in 2016. It evolved into a legal entity and then, with Carlyle’s support, has grown into the business that is today Fortitude Re,” he explains.

“They deserve the credit because they were the first to realise that what was originally a set of run-off reserves could be turned into a franchise. They have had an immense influence on conceptualising it as a business.

“The investors were confident that what at the time was a very niche industry would become a bigger part of the insurance ecosystem in the life annuity space and property casualty (P&C).

“The market opportunity has developed more quickly and on a greater scale than most would have expected in 2017,” says Neches, who joined Fortitude Re as CEO last September from Carlyle, having previously been at AIG.

“Depending on the metric you reference, our industry today already reinsures between half a trillion and a trillion dollars of reserves,” he says. “And then similarly, what has followed is the impressive quantum of capital and the number of high-quality competitors in the space.

“That combines to provide a very interesting marketplace, where we are well-positioned thanks to our capabilities.”

Playing to strengths

Neches believes the company’s size enables it to compete in this market. “When you combine a large market opportunity with more competitors, two things become readily apparent,” he says. “Not only is that market opportunity larger than you expect, it is also more complex. We see this in the lines of business that are coming to market and the ways our clients look to us to craft solutions to their bespoke and nuanced challenges.

“It is an industry that is increasingly skewed toward well-funded, sophisticated, liability-led reinsurers who not only bring capital to the table but are true service providers that utilise that capital to bring the needed solutions to clients.”

Another ingredient central to Fortitude Re’s success is the strength of the Bermuda regulatory framework. “One of the main attributes that attracted us to Bermuda in the first place was the Bermuda Monetary Authority’s (BMA) position as a sophisticated regulator that is well respected on the global stage.”

Neches says the company’s scale enables it to work with its clients across a broad range of solutions.

“We pride ourselves on our solution orientation,” he says. “It is not just about a capital solution. Equally important is our clients being able to go to their regulators and say: ‘we’re transacting with Fortitude Re’ and their regulators being completely comfortable with that.

“It’s about our clients going to their distribution partners and saying: ‘we are transacting with Fortitude Re’ and their distribution partners knowing they can trust Fortitude Re to provide exceptional client service.

“Our value proposition is not just a capital solution, it is the ecosystem around the service delivery of that capital. That client service is becoming increasingly important, especially as our business becomes more global.

“It is very important to me, and I think to all of us, to make clear to the market that we have the capabilities to transact at that scale but we also have, because of our scale, the ability to deliver those solutions across the spectrum of opportunities and constraints that our clients are facing.

“We’re quite proud of the fact that we’re not looking to do the big deals. It’s the deals that matter most to our clients that we’re interested in.”


Fortitude Re is something of an outlier in the Bermuda market because it operates in both life reinsurance and in P&C. Most companies stick to one or the other.

Jeff Burman, the company’s senior vice president and general counsel, says this goes back to the company’s roots with AIG and is a strength of the business.

“The genesis of the company was to reinsure both the life and annuity and casualty legacy liabilities of AIG,” he says. “From the very beginning, the design of the company was to be a solutions provider to our counterparties, even as an affiliate, and that has continued.”

Burman says the company’s composite licence with the BMA helps to provides capital diversification, which lends itself to good risk management in turn.

“We take pride in our ability to provide expertise across many different complex insurance lines and products, which makes us a unique solutions provider. We want to support our counterparties and provide optionality, flexibility and scale and scope with respect to what our clients are looking for.”

Andrew Sooboodoo, the company’s chief risk officer, notes that Fortitude Re is focused on long-dated liabilities. That cancels out many P&C lines, meaning it is primarily engaged in areas such as worker’s compensation, where there are long streams of payments.

“P&C provides us with risk and capital diversification, and there are also synergies across the life, annuity and P&C segments in which we operate in terms of the cashflow profile and risks, including for example the risk profiles of excess worker’s compensation and certain annuity products,” he says.

“Perhaps we don’t see many other firms adopting a composite strategy because it’s a challenge to acquire the expertise to assess the liabilities, and to have investors that appreciate that. We’ve been fortunate to be able to hire the right people such that we fully understand the risks and opportunities in those businesses, which ultimately accretes to our shareholders through more stable earnings and risk profile because of the diversified nature of our business.”

Fortitude, which plans to add to the 300 employees it has in Bermuda, New Jersey, Nashville and Japan, recognises that the skillsets it is looking for in new hires are not easy to find.

To that end, it is working hard on hiring and developing staff from within.

“We are proud of our summer internship programme of 25 undergraduate and graduate students, including in Bermuda,” Neches says. “We are cultivating talent, not just from external hires, but increasingly building our own talent base. It is the heart of the company and the heart of our future. We recognise that and we live it every day.”

Neches gives credit to the BMA for its regulatory rigour, and says it is one of the main reasons for being in Bermuda.

Sooboodoo recognises that it is natural that the growth of the life reinsurance sector in Bermuda has led to scrutiny, but says this is welcomed and to be expected. “Bermuda has been very successful, and what comes with success is attention.

“Bermuda is fortunate to have a regulator that prioritises policyholder protection and also understands that its companies provides a vital source of protection to insurers and their policyholders worldwide.

“The capital provided in Bermuda supports pensions and insurance payments when policyholders need it most. We recognise the critical importance of policyholder protection and financial stability, and the BMA certainly understands that,” he concludes.