A recent report from AM Best indicates that the life and annuity (L/A) reinsurance market is seeing intensified competition due to favorable conditions created by higher interest rates and improved mortality trends. As new capital flows into the sector—especially from alternative investment managers and private equity-backed reinsurers—these entities are increasingly willing to take on investment risks in pursuit of higher returns. While L/A reinsurers are well-capitalized and expected to maintain strong risk-adjusted capitalization through 2025, challenges remain due to uncertainty surrounding mortality rates, particularly in the wake of COVID-19. The ongoing evolution of the market underscores a shift towards more diversified asset portfolios and attractive ceding commissions amidst a competitive landscape.
