BBB-rated Bond Exposure for Life Insurers

Life insurers significantly increased their holdings of NAIC Class 2 bonds (bonds with BBB/Baa ratings public rating agencies) in the years since the financial crisis of 2008-2009.

MetLife and Prudential Cede Legacy Blocks

In the past week both MetLife, Inc. (MetLife) and Prudential Financial, Inc. (Prudential) announced reinsurance transactions pertaining to existing products and business lines. Details regarding each transaction are highlighted below:

No Surprise – Hallmark Insurer Subsidiaries Downgraded

As if on cue, last Friday (May 5th) A.M. Best downgraded the Hallmark Financial subsidiaries below the critical “A-” level to “B++” (5th highest), citing a “significant decline in Hallmark’s balance sheet strength and operating performance due to continued adverse development in the group’s retained discontinued commercial auto lines.”

Lincoln National Reinsures $28 Billion of Reserves to Fortitude Re

On May 2, 2023, Lincoln National Corp. announced that it had entered into a reinsurance transaction with
Fortitude Reinsurance Company, Ltd. (Fortitude Re), a Bermuda domiciled reinsurer. The transaction comprises $28 billion of reserves (on a statutory accounting basis) and encompasses several blocks of business held by LNC’s life insurance subsidiaries which include: