ROUNDTABLE: LIFE RE
Q1: TELL US ABOUT YOUR COMPANY AND ITS STRATEGY
“We’ve closed on two separate reinsurance transactions.” Faisal Haddad
Faisal Haddad: North End Re has been established to be a leading reinsurer focused primarily on reinsuring asset intensive life and annuity products issued by US and European insurance and reinsurance companies. North End Re has entities licensed in Bermuda and the Cayman Islands.
It is a subsidiary of Brookfield Asset Management Reinsurance Partners (BAM Re), a leading reinsurance business focused on providing capital-based solutions to insurance companies and their stakeholders, which was listed on the TSX and NYSE following spin-out from Brookfield Asset Management, a leading global alternative asset manager with approximately $650 billion of assets under management across real estate, infrastructure, renewable power, private equity and credit.
Since its formation, BAM Re has announced transactions representing over $40 billion in assets, including an agreement to acquire American National Group and to reinsure up to $10 billion of annuity liabilities of American Equity Life.
“We underwrite insurance policies for high net worth customers.”
Allison Pedro
Our strategy has been implemented over the past 12 months. That included setting up the North End Re entities, getting the licences from regulators (the Bermuda Monetary Authority [BMA] and Cayman Islands Monetary Authority) and getting things to be fully operational.
We have also been having discussions with our partners pursuing business. So far, we’ve closed on two separate reinsurance transactions.
Allison Pedro: I am the chief financial officer of Sun Life Assurance Company of Canada’s Bermuda branch. Sun Life is a publicly-traded Canadian firm that offers insurance, wealth, and asset management services. We have more than 42,000 employees globally. The Bermuda branch focuses on the high-net-worth business. We underwrite insurance policies for high net worth customers and manage a block of wealth investment products in run-off.
As a direct writer of business, as opposed to reinsurance, I can offer a slightly different perspective. How you manage actively written business is very different from pure reinsurance.
“We employ around 150 people in three locations.”
Kai Talarek
Kai Talarek: Fortitude Re is now a $50 billion vehicle, located in Bermuda, formed originally to manage historical AIG liabilities that AIG thought were unsuitable for a publicly-traded insurer. It was formed in 2018 to manage both life and P&C liabilities. That was possible because of Bermuda’s economic-focused regulatory framework, distinguishing it from any US regulatory regimes.
In 2020, Carlyle and other investors bought out AIG’s dominant interest; AIG now owns only a 3.5 percent ownership in Fortitude Re. With the change in ownership and the legal separation from AIG came a renewed emphasis on growth.
We’ve completed two trades this year. One was when we purchased a book of legacy VA business from Prudential Finance. That was followed by a minor deal with USAA but both transactions were consistent with our broader concentration on very long-dated illiquid liabilities.
At this stage, we employ around 150 people in three locations. In addition to Bermuda, we have a back-office function in Nashville, and an office in New Jersey.
Kevin Hovi: Kuvare Life Re and the Kuvare group have been in operation for five years and I am the president and chief financial officer of our Bermuda business. The Kuvare organisation was founded to be a life insurance provider focused on middle-income consumers in the US. We have three different US operating branches, which are licensed life insurance companies that directly face consumers.
“Our retail business in the US is doing well.”
Kevin Hovi
We started our reinsurance operations as a capital provider looking to face third-party life insurance companies similar to our own US operations. As a result, we’re concentrating on reinsuring smaller and medium-sized blocks with middle market-facing life insurance companies.
We have two separate Bermuda operating platforms and, in total, we have about $30 billion in assets across our overall business. About a third of that is held on Bermuda balance sheets; about two-thirds stays in the US.
From a growth perspective, in 2020, we grew by about $4 billion between reinsurance deals and organic premiums and are targeting something similar for 2021. Our retail business in the US is doing well as is the reinsurance segment.
Our investment strategy is to incrementally improve yields while maintaining an investment-grade risk profile. We operate an internal asset management team which means that we have the ability to optimise our portfolio among best of breed third party managers as well as our internal team.
Our investors do not manage the assets for us but are highly involved from a governance perspective.
Other than that, we look and feel like the other annuity writers on the Island, but are focusing more on deal sizes that are smaller than those of some of the other providers
Video on previous page courtesy of Adobe Stock / denklim
Image courtesy of Shutterstock / Vintage Tone
