What A Difference Six Years Has Made To The U.S. Life Re Market
Acquisitions by foreign companies have changed the U.S. life reinsurance market dramatically in only the last six years, said a speaker at the annual meeting of the American Council of Life Insurers here.
David Atkinson, president and CEO of RGA Reinsurance Company, said that in 1995 there were 18 U.S. life reinsurers with 2% or more in market share. Of these, the top 9 controlled 73% of the market and the other 9 controlled 24%.
“Half of these 18 have been acquired since 1995,” Atkinson said.
In 1995, Transamerica Re was ranked number one with 16% market share.
Today, Swiss Re is number one with a 30% market share as a result of having acquired Lincoln Re, Life Re, Mercantile & General and CIGNA Re, Atkinson said.
Transamerica Re was acquired by Aegon, and among those 18 reinsurers of 1995, RGA was acquired by Met Life, Cologne Re by General Re, Phoenix Home by ERC and CNA Re by Munich Re.
The way the market looks today, said Atkinson, is that 12 reinsurers control 99% of the market. Of these 12, he said, only 4 are U.S.-owned.
Atkinson then proceeded to take a look at each of his competitors in the U.S. reinsurance market. (His own company, RGA Re, currently ranks #3 with an 11% market share.)
Swiss Re, ERC and Munich Rewhich currently rank #1, 4 and 5have a couple of things in common, he said. “Their core P&C reinsurance business is producing poor results,” he said, “and they have deep pockets” or excess capital.
The life reinsurance business of these companies has been growing fast, Atkinson said. But what acquisitions they have made, particularly Swiss Re and Munich Re, “have not been cheap.”