Financial reinsurance: A powerful tool

Financial reinsurance is a powerful tool available to direct writing companies for managing and generating statutory capital. This focus is in contrast to yearly renewable term reinsurance, which concentrates on reducing mortality risk and not on any surplus benefit for the direct writing company. Financial reinsurance has had a growing impact on US life, health and annuity products, the focus of this article. An informal survey conducted by RGA/Swiss Financial Group estimates new financial reinsurance placed at approximately $1 billion for each of the last 3 years. However, several recent demand trends have developed which are highlighted.