U.S. life insurance and annuity players could make more complicated deals in the next year or so, and many of those deals could be structured as reinsurance arrangements.
Philip Salem, co-head of the Americas insurance sector in the investment banking division at the Goldman Sachs Group Inc., made that case today in New York, during a session on insurance deal activity, at the S&P Global Ratings 2019 Insurance Conference.
The two-day conference is bringing top life insurance company executives together with investment bankers and money managers.
S&P Global Ratings’ own ratings influence what deals can be made, and at what cost.
The deals that are completed may affect how many career agents life insurers need, and the range of life and annuity products that brokerage general agencies and other distributors can offer.
Today, Salem said, the value of U.S. life and annuity deals is averaging about $8.9 billion, down from about $12 billion before the Great Recession struck.
The buyers have initiated about 80% of the deals, even when the deals have been friendly.
Salem said he believes that concerns about life insurance company reserves for products such as long-term care insurance, variable annuities with minimum benefits guarantees, and life insurance policies with certain types of benefits guarantees have made traditional deals involving one large life insurance company acquiring another big life insurance company rare.