Munich Re Unveils Longevity Reinsurance for North America
Munich Re North America Life, a subsidiary of global reinsurance firm Munich Re, has launched a longevity reinsurance solution for the United States and Canada.
The product allows clients to transfer biometric risk while accumulating assets.
Longevity risk transfer
Longevity reinsurance enables clients to convert uncertain future pension or annuity payments into a fixed cash flow stream. This process involves locking in mortality assumptions and a fee at the outset of the agreement.
Mary Forrest, President and CEO of Munich Re North America Life, says: "We believe there is significant, untapped demand for longevity reinsurance in the US and Canada markets and we are well positioned to meet it."
The launch comes amid increased reserve and capital requirements for longevity risks, with further regulatory changes expected in the US. Insurers and asset reinsurers can now leverage Munich Re's balance sheet and mortality expertise to manage these risks.
Munich Re North America Life, which includes Munich Re Life US and Munich Re, Canada (Life), has served the US, Canada, Bermuda and Caribbean markets for 65 years.
The company's longevity reinsurance capability can complement various risk management strategies, particularly as the pension risk transfer market grows alongside elevated interest rates.
Global expertise
Mary emphasises the company's global perspective: “We are now among the few reinsurers offering longevity reinsurance to the North American market.
“In addition to our decades of expertise here in mortality risk assessment, we bring a global perspective and practical knowledge via Munich Re Group's significant experience executing longevity transactions in Europe.”
The firm's team of experts in North America can support successful longevity transactions through specialised actuarial, risk and legal knowledge. It also offer data-based insights on mortality assumptions, crucial for accurate pricing and risk assessment in longevity reinsurance.
Growing demand
The pension risk transfer market has seen significant growth in recent years. This expansion, coupled with insurers seeking to balance mortality and longevity risks, has created a fertile environment for longevity reinsurance products.
Mary explains the company's approach: “We are known for applying our scale, capacity, and insight to solve complex client challenges in ways that enable them to grow their businesses.
“We look forward to partnering with clients to evaluate the impact of longevity reinsurance and to designing a customised approach that supports their specific goals.”
Munich Re's new offering allows clients to pass on longevity risk, which is the risk that pension scheme members or annuity policyholders live longer than expected. This transfer can help insurers and pension schemes manage their long-term liabilities more effectively.
The longevity reinsurance market in North America is less developed compared to Europe, where such transactions have been common for years. Munich Re's entry into this market could signal a shift towards more widespread adoption of longevity risk transfer solutions in the region.
Mary concludes: “We bring a global perspective and practical knowledge via Munich Re Group's significant experience executing longevity transactions in Europe.”
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