A.M. BestTV: U.S. Life/Annuity Insurers Step Up Use of Reinsurance, Says Best Director

By a News Reporter-Staff News Editor at Business & Finance Week -- In this A.M.BestTV episode, William Pargeans, director, A.M. Best, reviews a new report that details how life and annuity insurers are using reinsurance for overall risk management, coverage of specific risks, supporting new products and more. Click on http://www.ambest.com/v.asp?v=laparjeans118 to view the entire program.

U.S. life/annuity insurers have increased the aggregate face amount of policies ceded to reinsurers to $28 trillion since 2006, an increase of 83%, according to a recent Best's Special Report.

"Using reinsurance for risk management is certainly not a new concept; however, companies' enterprise risk management (ERM) programs have received a lot of attention in recent years," said Pargeans.

Pargeans addressed the potential of counterparty risk to primary writers given the top-heavy nature of the life reinsurance market.

"Diversification is always something that is looked upon favorably. After a wave of consolidations, there are five primary life reinsurers that absorb about 80% of the business that is presented to the life reinsurance market, so the counterparty exposure is concentrated in these five players. Nevertheless, those five players are very highly rated by A.M. Best and that reduces the credit exposure to some degree," he said.

To access the full copy of this special report, titled, "Consolidation Narrows Reinsurance Options Despite Greater Reinsurance Risk Appetite for L/A Insurers," please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=269626.

Keywords for this news article include: A.M. Best.

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