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Category: White Paper

U.S. Life Insurers’ Bermuda Reinsurance Exposure

The U.S. Life Insurance Industry has long utilized foreign reinsurance as part of its risk and capital management strategies. In recent years the use of foreign reinsurance (particularly via Bermuda reinsurers) has become increasingly common among life insurers (especially for those issuing individual annuities), which has raised some questions among industry participants. As seen in the table below, Bermuda was by far the largest non-U.S. reinsurance destination for U.S. life insurers and accounted for just over a third of total ceded life insurance and annuity (L&A) reserves1 at year-end 2023.

U.S. Surplus Lines – 2024

A.M. Best recently released its annual review of the surplus lines industry which it has published for the last three decades. ALIRT uses this opportunity to refresh its own 50 Company Surplus Lines Composite, both to corroborate what others in the industry are seeing as well as to provide an update as of the 6 Month 2024 reporting period for this important and growing sector of the industry.

ALIRT Update: Residual Market Trends in Four Higher Catastrophe Risk States

This article is about the recent trends and developments in residual market mechanisms within the property insurance industry in four high-risk catastrophe states: California, Florida, Louisiana, and Texas, highlighting the challenges and reforms faced due to increased weather-related losses and market instability.

American Mobile: The Short Life of a Reciprocal Insurance Exchange

This article discusses the brief history of the American Mobile Insurance Exchange (AMIE), a small insurer focused on mobile home insurance in Florida, and the factors leading to its administrative supervision and eventual run-off in 2024. Key points include the rapid rise and challenges of the reciprocal insurance exchange model, the involvement of private equity, and the impact of high reinsurance costs and inadequate coverage on AMIE’s financial stability.

BBB-rated Bond Exposure for Life Insurers

In this article, you’ll read about the significant increase in NAIC Class 2 bond holdings by U.S. life insurers since the 2008-2009 financial crisis, driven by a search for higher yields amidst stable economic conditions. The article also discusses how recent changes in risk-based capital regulations and economic challenges may impact the industry’s bond investment strategies and overall financial stability.

Fronting Companies Accredited and Sutton: A Tale of Two Troubled Parents

This ALIRT Research report explores the financial turmoil at the holding companies of Accredited and Sutton fronting insurers. Both companies faced significant challenges due to their parent companies’ financial distress, leading to ownership changes to avoid rating downgrades. The report underscores the importance of considering both the insurer and its parent company in due diligence, highlighting the complex dynamics between fronting insurers and private equity ownership.