Ratings agency, AM Best is maintaining a stable outlook for the global life reinsurance market, saying mortality in 2023, which remains elevated relative to pre-pandemic figures, appears to have levelled off.
AM Best adds that the market remains concentrated in a handful of experienced and well-capitalized global companies. The agency also attributes the rating to persistently healthy levels of risk-adjusted capital and liquidity.
Continuing uncertainty
On the flip side, however, the recent note, Market Segment Outlook: Global Life Reinsurance says inflation concerns and the potential for economic disruption remain. There is continued uncertainty about longer-term impacts on mortality, and the note focuses on new, offshore reinsurance market participants. These, they say, have focused on annuity reinsurance, asset intensive reinsurance and block legacy book transactions, not traditional mortality business.
“Over the long run, we expect that as we evaluate the need for additional due diligence related to this trend, better-run companies will emerge. We continue to monitor developments in all relevant jurisdictions in this space,” says AM Best.
Mortality rates
They add that mortality overall remains manageable, even amid uncertainty surrounding mortality assumptions for new reinsurance. “Mortality rates appear to have stabilized in the post-COVID-19 environment. Established reinsurers are well-placed to pay current mortality claims, but whether mortality will return to lower, pre-COVID levels is uncertain,” the agency says.
“Problems such as liver disease, drug use, diabetes and suicide present a challenge in pricing life reinsurance new business, especially in the younger, working age segments of the market.”
