Why Base a Life and Annuity Reinsurer in Bermuda?

Athene Holding Ltd. recently completed making a $500 million equity investment in Jackson National Life Insurance Company.

In an effort to explain the deal to investors, Athene also posted a discussion of its corporate structure.

For people with a deep interest in insurer capitalization and reinsurance arrangements, Athene provided a look at its capitalization and reinsurance arrangements.

The Pembroke, Bermuda-based reinsurer also addressed a simpler question, that may have occurred to many ordinary life and annuity agents: Why are so many insurers putting their head official headquarters in the Caribbean, rather than traditional U.S. insurance industry centers, such as New York City and Hartford, Connecticut?

Resources

• A link to Athene’s discussion of its corporate structure is available here.
• An article about the Jackson deal is available here.

Here’s how Athene answered the question in connection with its own headquarters location thinking.

Athene says in the corporate structure guide that it wants to sell reinsurance to insurance companies based in Europe as well as to insurance companies based in the United States?

Bermuda is a great place to locate a company that works with both U.S. and European insurers, Athene says.

For the United States, the National Association of Insurance Commissioners has designated Bermuda as a “qualified jurisdiction,” and as a “reciprocal jurisdiction” for reinsurance purposes, meaning that U.S. insurance regulators can look at reinsurance from a Bermuda-based company about the same way they might look at reinsurance from a Hartford-based company.

Europe has its own tough Solvency II insurer financial stability regulation system. For European Solvency II purposes, European regulators have approved Bermuda for Solvency II equivalency, Athene says.

That designation puts “Bermuda on par with European peers when competing for business in the European Union,” Athene says.

Bermuda already has a big reinsurance industry, and reinsurers “domiciled” there generated about $150 billion in reinsurance premiums in 2017, Athene says.

When Athene provides a reinsurance treaty for a U.S. based insurer, the insurer and Athene decide whether to have the reinsurance come from a Bermuda-based Athene unit or a U.S.-based unit based on accounting, tax and regulatory considerations, Athene says.

If Athene had a dispute with a U.S. insurer, any breaches of contract due to failures to pay amounts due to the insurers would be subject to U.S. law, and any disputes over payments would be subject to U.S. arbitration rules, Athene says.

Athene notes that it posts the key financial filings it files with the Bermuda Monetary Authority here.

— Read Athene Has Big Fish on the Line, on ThinkAdvisor.

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