Group Life Reinsurance Ceded Seesawed In Last 5 Years

While group life insurance in-force business has grown steadily since 1999, reinsurance ceded from this business during this time has been a story of more dramatic peaks and valleys, according to data provided by National Underwriter Insurance Data Services.

For the top 25 group life insurers, group life in-force grew 8.5% in 2003 compared with 2002. In previous years, year-over-year growth was 6.8% in 2002; 11.9% in 2001; and 7.9% in 2000. (See chart on this page.)

Changes in group reinsurance ceded at year-end by the top 25 companies moved more dramatically in year-over-year comparisons than group in-force totals. (See large chart on page 17.)

In 2003, reinsurance ceded at year-end grew 12.8% over 2002. Respective year-over-year growth in previous years was 24.4% in 2002; 15.6% in 2001; and 68.2% in 2000.

While both group life in-force and reinsurance ceded each grew year over year through 2003, their growth rates did not correlate. So, for instance, the 11.9% growth rate in 2001 for the in-force total was slightly higher than the 7.9% year-over-year growth rate registered in 2000. However, looking at reinsurance ceded, the year-over-year growth rate was only 15.6% in 2001 compared with 68% in 2000.

In 2002, the year-over-year growth rate for group life in-force was 6.8%, down from the previous years 11.9% growth rate. Reinsurance ceded, however, grew 24.4%, up from a year-over-year growth rate of 15.6% in 2001.

And, in 2003, the year-over-year growth rate increased to 8.5% for the in-force total while the growth rate for reinsurance ceded declined to 12.8%.

The top 5 insurers as measured by group life insurance in-force at year-end averaged 60% of the total for the top 25 in that category for a 5-year period. The percentage remained relatively even over that time span with the following shares of total in-force amounts: 61% in 2003 and 2002; 60.5% in 2001; 59.7% in 2000; and, 58.5% in 1999.

Of those same 5 companies, the average ceded totals as part of the share of the top 25 insurers averaged 52% over the same 5-year period. The percentage did vary over that 5-year time span, with the following shares of total ceded amounts: 55% in 2003; 61% in 2002; 59% in 2001; 56% in 2000; and, 28% in 1999.

The top 10 insurers as measured by group life insurance in-force averaged 79% of the total for the top 25 in that category for a 5-year period. Over that time span the top 10 had the following percentages: 78% in 2003; 80% in 2002; 80% in 2001; and 78% in both 2000 and 1999.

Of those same top 10 companies, the average ceded as part of the total share ceded by the top 25 was 61% over 5 years. The percentage varied over that time span as follows: 62% in 2003; 68% in 2002; 67.5% in 2001; 64% in 2000; and, 42% in 1999.


Reproduced from National Underwriter Edition, July 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.