Company profile: 777 Re

Will Rinehimer, chief executive officer and chief financial officer of life reinsurance specialist carrier 777 Re, based in Hamilton, has a longstanding association with the Island, with over 20 years of experience operating in the market—most recently as president and CFO of Front Street Re.

Rinehimer got the call to join 777 Re when the company was founded in 2019 after its sponsor, the Miami-based alternative investment firm 777 Partners, spotted an opportunity in the life and annuity sector. 777 Partners currently operates across insurance, consumer and commercial finance, litigation finance, direct lending, media, entertainment and aviation.

The logic behind the move was that the capital base of primary carriers across the globe was becoming increasingly stretched by prolonged low interest rates combined with expensive legacy life and annuity liabilities on the balance sheet, which they believed could be aggregated to alleviate some of that pressure. Since its foundation, 777 Re has targeted both active and run-off blocks of life insurance and annuity business.

Most recently, the firm completed two reinsurance transactions with US-based insurance companies, in which the original underwriters will continue to service and administer the policies but will be covered under a quota share of newly written fixed-index annuity policies.

For Rinehimer, Bermuda was the obvious base for such a business, particularly due to its strong and accommodating regulatory environment, which is set up to help new business. He outlined his views in an interview with Bermuda:Re+ILS.

The proper choice

“I’ve been in the Bermuda life reinsurance market for 20 years and know that the jurisdiction is the proper choice for a number of reasons—primarily related to the efforts of the Bermuda Monetary Authority (BMA),” Rinehimer says.

“The BMA has been instrumental in formulating a well-established regulatory framework that enables Bermuda to be one of the world’s largest re/insurance markets. The professionals at the BMA have a reputation for strong but thoughtful, pragmatic regulation and we have confidence in their responsiveness and consistent decision-making.”

Rinehimer highlights the strategically beneficial position of Bermuda as an entry point for reinsurance partnerships in the US and Europe. It was a vital factor for sponsors when choosing a base for the venture.

“777 Re has an interest in reinsurance partnerships on both sides of the Atlantic, so Bermuda’s position with the EU/UK (Solvency II equivalence) and the US (Qualified Jurisdiction & Reciprocal Jurisdiction) work well for our business model,” he says.

Rinehimer believes that the company won’t be short of opportunities in the coming years—particularly with the shifting dynamics of the global economy post-pandemic, which should provide even further openings for the types of transactions it can offer carriers.

Investors are pushing ever further into more alternative asset classes as the hunt for additional yield rolls on with interest rates at historic lows, while other catalysts such as the potential for higher inflation over the short term also provide opportunities.

Higher inflation could affect operating expenses and insurance products with features such as public retirement plans and private pensions, and Rinehimer says that these will naturally prompt carriers to reevaluate their asset management strategies when it comes to long-term liabilities such as life policies.

“Asset liability management as a proactive tool will be necessary to analyse long-dated liabilities with adequate investment/reinvestment returns, along with potential liquidity requirements,” he says.

Looking overseas

The Bermuda reinsurance market is on a trajectory to strike more international relationships, which will help to boost the sector over the coming years, Rinehimer predicts.

“Rational and credible reinsurers will continue to open up the Bermuda reinsurance market to counterparties in new and existing jurisdictions; there appears to be enough demand to ensure that all participants are successful,” he says.

While most re/insurance sectors (and, indeed, markets in all industries) have felt some sort of impact from the effects of COVID-19, Rinehimer says it hasn’t fundamentally changed the company’s strategy of targeting asset-intensive, long-dated liabilities primarily in the EU, US, and UK markets, with demand for capital relief transactions remaining strong.

However, he adds, the events of the last 18 months have naturally brought the “reality of mortality” to the forefront of everyone’s consciousness, which strongly underlines the economic and social value of the life re/insurance sector.

“Overall, this reaffirms the need for life insurance and continuing support for survivors. Time will tell if this has a lasting impact on the sales of life-related coverage or if it is just a fleeting epiphany,” he says.

“Our insurance partners have communicated that the market remains strong for retirement income protection, and we also see a strong pipeline for new opportunities.”

Image: 777RE.com

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