Life reinsurance executives say they think the rating agencies should have a more positive view of financial reinsurance.
The executives made that case here recently at the annual meeting of the Society of Actuaries, Schaumburg, Ill.
Jeff Poulin, a senior vice president at London Life Reinsurance Company, Blue Bell, Pa., was one of several SOA event speakers who said the rating agencies seem to prefer securitizations to financial reinsurance.
Eliot Spitzer, a Democrat who is now governor of New York and was attorney general, roiled the financial reinsurance market a few years back by investigating allegations that some financial reinsurance customers were using products written by property-casualty insurers to “smooth earnings” rather than to transfer risk.
The life financial reinsurance market now is starting to overcome the “Spitzer effect,” Poulin said.
“A lot of bad things had been done on the [property-casualty] side but the life side is a lot cleaner,” Poulin said.
Tight reserve credit rules and risk transfer rules helped on the life side, Poulin said.
Another speaker, Jeff Burt, a vice president at Hannover Life Reassurance Company of America, Orlando, Fla., expressed similar views.
In 2007, the “deal flow has been really busy since the first of the year,” Burt said.
Stronger requirements helped protect the life financial reinsurance market, and efforts to increase disclosure to regulators and rating agencies should improve the situation even more, Burt said.