Reinsurance Sector Booms in 2024 with Major Deals and Offshore Growth
The reinsurance sector witnessed significant growth in 2024, driven by strategic partnerships and increased offshore activity. Two major life insurers, Athene and Brookfield Wealth Solutions, sealed substantial reinsurance deals with Japanese counterparts, marking a significant shift in the global reinsurance landscape.
The year 2024 saw a surge in reinsurance growth, with reserves ceded increasing to $2.4 trillion from $2 trillion in 2023. This growth was fueled by partnerships between insurers and alternative investment managers, as well as the increased use of offshore reinsurance platforms. Record annuity sales also contributed to this growth.
Two life insurers announced significant reinsurance deals with Japanese reinsurance companies. Athene, a subsidiary of Apollo Global Management, inked a block reinsurance transaction with Sony Life Insurance Co. This was Athene's second such deal with a Japanese insurer in five years, following a $19 billion block reinsurance deal with the same company in 2019. Meanwhile, Brookfield Wealth Solutions signed its initial reinsurance agreement with Dai-ichi Frontier Life, allowing the Japanese insurer to reinsure liabilities to its U.S.-based subsidiary on a flow basis.
U.S. insurers view the Japanese market as an opportunity for additional spread-based income, while Japanese insurers seek capital relief due to the implementation of the Economic Solvency Ratio. This mutual benefit has driven recent reinsurance transactions. Regulators have also introduced a new guideline for asset adequacy testing of reserves backing offshore reinsurance contracts, further facilitating this growth.
The reinsurance sector's growth in 2024, fueled by strategic partnerships and increased offshore activity, has reshaped the global reinsurance market. Athene and Brookfield's deals with Japanese insurers reflect this trend, with both parties finding mutual benefit. As regulators continue to provide clarity, the reinsurance sector is poised for further growth and innovation.
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