Mergers Fuel Life Reinsurance Growth.Mergers and acquisitions among life insurers and new players entering the market are boosting 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. business, said A. Greig Woodring, president and chief executive officer, Reinsurance Group of America Inc., whose principal operating company operating company A business that engages in transactions with outsiders. is RGA RGA Reinsurance Group of America RGA Return Goods Authorization RGA Republican Governors Association RGA Residual Gas Analyzer RGA Royal Garrison Artillery RGA Restricted Growth Association (UK) RGA Rate Gyro Assembly Reinsurance Co. Woodring said life reinsurers had achieved a 22% compound average growth rate over the past five years. In 2000, out of a total of $18.5 trillion in existing life insurance, $4.15 trillion was reinsured. The life reinsurance business belongs to the biggest players, Woodring said, noting that the five largest life reinsurers had 60% of the business last year. He expects the percentage of life business reinsured to grow based on the following factors: * Life insurers are using reinsurance to manage their in-force business in the wake of a merger or acquisition, often reinsuring in-force blocks of business. "As they get bigger, they learn the value of reinsurance," Woodring said. Companies use reinsurance in such instances to "resculpt the liability side of their balance sheet," he said. * As banks build their life insurance business, they are expected to cede the mortality risk. * As life insurers focus more on distribution and asset management to compensate for slow growth in life insurance sales, they are interested in reinsuring more business to free up capital for expansion. Other life reinsurance growth areas include the following: * Asset-intensive products, such as annuities. * Producer-owed reinsurance. Agents and brokers reinsure re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. a portion of their book of business into a captive with the goal of capitalizing on good results. Another facet of life reinsurance is the automatic market, which includes whole and term life products. "Price always wins with the hot term products," he said, noting that for the past 18 to 24 months, RGA has been on the sidelines On the sidelines An investor who decides not to invest due to market uncertainty. on the sidelines Of or relating to investors who, having assessed the market, have decided to avoid committing their funds. of the term reinsurance market. "We don't need to compete on term to complete our growth story." Reinsurers work with life insurers to underwrite special circumstances special circumstances n. in criminal cases, particularly homicides, actions of the accused or the situation under which the crime was committed for which state statutes allow or require imposition of a more severe punishment. , such as a 65-year-old man who has undergone heart-bypass surgery. In such cases, the reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. is furnished with the applicant's entire medical files to aid in underwriting, Woodring said. RGA Reinsurance Co. A.M. Best #: 09080 Rating: A+ Headquarters: Chesterfield, Mo. Lines of Business: Facultative facultative /fac·ul·ta·tive/ (fak´ul-ta?tiv) not obligatory; pertaining to the ability to adjust to particular circumstances or to assume a particular role. fac·ul·ta·tive adj. 1. life reinsurance, risk-management planning |
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