What is the value of the long-term insurance sector to Bermuda and the world?

The Bermuda market is the perfect platform to support the world’s ageing population, say six leaders of the long-term re/insurance sector.

In attendance:

Chantal Cardinez, chief executive officer, Hannover Re Bermuda

Steve Hales, chief executive officer, Resolution Re

Sylvia Oliveira, chair and chief executive officer, Wilton Re Bermuda; former chair, BILTIR

Christine Patton, executive director, BILTIR

Natasha Scotland Courcy, chief executive officer and general counsel, Athene Life Re; chair, BILTIR

Andrew Sooboodoo, chief regulatory officer, Fortitude Re

Moderator: Bill Zuill, editor, Bermuda:Re+ILS

“The regulatory framework is appropriately meeting the risks.” Natasha Scotland Courcy

Natasha Scotland Courcy: Some recurring themes are happening on our side of the market, one of which is ongoing pressure from public markets for insurers to de-risk some older portfolios and to free up capital. We’re serving those insurers globally.

Reinsuring life and annuity portfolios is an efficient way for these primary insurers to source additional capital, and we’re doing that without disturbing their end-user relationships with policyholders.

There’s an additional layer: an ageing population globally, and an increasing pension protection gap. More individuals are nearing retirement, fewer people are entering the workforce. The latest numbers I’ve seen estimate the global protection gap to be $1 trillion per annum per the Global Federation of Insurance Associations Global Protection Gap report published in March 2023, and it’s growing.

All those factors combined are why you’re seeing increasing demand for the services our sector is providing. We’re able to provide customisable solutions and products to help meet some of these customer-specific needs and demands.

In terms of market and industry outlook and the impact of Bermuda on our sector, we are now at a maturation point. We have approximately $1.2 trillion in reserves sitting on Bermuda balance sheets. We recently did our own long-term industry survey, which included a very large portion of our membership, and based on that data, we were able to see that assets exceed our liabilities in Bermuda by $140 billion—that’s very significant. 

Seventy-three percent of those assets are being held on cedants’ balance sheets. 

In terms of the dialogue around protection, safety, and ultimate policyholder protection, those numbers can speak very loudly for that value proposition. As assets under management (AUM) are growing, regulatory change is matching that growth. So the numbers are large but the regulatory framework is appropriately meeting the risks as well. Over 70 percent of our rated licensed members have a credit rating of ‘A-’ or above.

“We want to make sure that all the players in the market are set up for success.” Natasha Scotland Courcy

Our ultimate point here is the value proposition of the market. The policyholder balances are safe and our focus is now on sustainability in the long term. We are good corporate citizens in terms of financial stability, and our balance sheets are appropriately capitalised to go along with that.

Along with our partners we welcome regulatory changes generally, because we do understand that they need to keep pace with the growing AUM. We want to make sure that all the players in the market are set up for success with respect to policyholder protection.

So I think the value will remain; we’re all in long-term businesses here. But on top of that, risk mitigation and policyholder protection are also there for the long term.

“The real value of the reinsurance sector is that it’s a completely aligned way of managing that capital.” Steve Hales

Steve Hales: We need to look at what’s happening in the primary industry, which is capital-constrained. There are different ways that insurance companies can source capital, and the real value of the reinsurance sector is that it’s a completely aligned way of managing that capital. It’s subject to the same kind of regulatory regimes, approaches and principles, and the same set of management methods.

It’s therefore a very good match for providing capital to these long-term liabilities, because you’re helping companies to reduce their risks on their existing balance sheets, or you’re providing capacity so they can grow in different markets, whether it is for savings products or pensions.

Companies have various ways of sourcing capital, but reinsurance is a very aligned and safe and prudent way of providing that capital for the long term. The key is providing long-term capital, because the sort of products we’re reinsuring are going to carry on for decades.

“We’re providing capacity for affordable products for an ageing population.” Sylvia Oliveira

Sylvia Oliveira: I’d like to take the opportunity to remind everyone that we are in a sector that is doing social good. We are providing capacity for retirees and for families to protect their wealth for their heirs. We’re providing capacity for affordable products for an ageing population, and we’re doing so in a prudent way with a very long-term horizon.

Bermuda is an important pillar in this structure where we’re providing capital and capacity for ceding companies to be able to support social needs and to assist in closing the protection gap.

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