A.M. Best Special Report: U.S. Life Reinsurance Market Ponders What's Next.OLDWICK, N.J. -- In its recently released special report on the life reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. marketplace, the A.M. Best Co. states that consolidation in recent years has eliminated a number of marginal players that were not fully committed (Law) committed to prison for trial, in distinction from being detained for examination. See also: Fully to life reinsurance. The remaining players, then, for the most part were large, with scale advantages and solid new business momentum, and thus little was thought to be gained through further major merger activity. A.M. Best further believes that additional consolidation among smaller companies was well within the realm of possibility but was not expected to have a significant impact on the industry. Things have changed upon entering the latter half of 2006. Scottish Re Group Ltd. (Scottish Re) (Cayman Islands Cayman Islands (kā`mən), British dependency (2005 est. pop. 44,300), 100 sq mi (259 sq km), comprising three islands in the West Indies. ) reported a sharp, unexpected second-quarter loss, triggering rating downgrades by A.M. Best as well as similar actions from other credit rating agencies Credit Rating Agencies Firms that compile information on and issue public credit ratings for a large number of companies. . Scottish Re, in turn, announced its intent to explore alternatives that included a possible sale of the company. As capacity now is likely to be reduced further at a time when more capacity may be demanded, it would seem to be an ideal climate for new entrants. However, A.M. Best does not expect any will emerge. First, there is a significant barrier to entry, as life reinsurance is very capital intensive. Investors may be more wary of funding a new entrant en·trant n. One that enters, especially one that enters a competition. [French, from present participle of entrer, to enter, from Old French; see enter. in this market. Paradoxically par·a·dox n. 1. A seemingly contradictory statement that may nonetheless be true: the paradox that standing is more tiring than walking. 2. , at the same time that the number of players is shrinking, competitive pressures are building for life reinsurers. Moreover, A.M. Best believes alternative solutions to traditional reinsurance will continue to emerge, thus competing directly with reinsurers for certain types of capital relief business. Over time, therefore, A.M. Best believes the life industry may become increasingly less reliant on reinsurance for capital management solutions. BestWeek subscribers can download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. a PDF (Portable Document Format) The de facto standard for document publishing from Adobe. On the Web, there are countless brochures, data sheets, white papers and technical manuals in the PDF format. copy of all full special reports at no additional cost or a combination of the PDF copies plus all related spreadsheet files of the report data at no additional cost from our Web site at www.bestweek.com. Nonsubscribers can download a PDF copy of the full special report (4 pages) for $30 or a combination of the PDF copy plus the spreadsheet file of the report data for $55 from our Web site at www.bestweek.com. Call customer service for more information, (908) 439-2200, ext. 5742. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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