2018 US-Canada Life Reinsurance Survey Results

2018 Life Reinsurance Survey Results

Anthony Ferraro, FSA, MAAA VP & Actuary, Life Pricing Disclaimer

Munich Re prepared this survey on behalf of the Society of Actuaries Reinsurance Section as a service to section members. The contributing companies provide the data in response to the survey. The data is not audited and Munich Re, the Society of Actuaries and the Reinsurance Section take no responsibility for the accuracy of the figures.

Who: Top U.S. and Canadian reinsurers What: Individual and group new business (assumed) and in force Definitions Recurring: issued in same year as reinsured Portfolio: issued prior to year reinsured and financial reinsurance Retrocession: reinsurance not directly written by ceding company

Reinsurance figures for individual life based on amount (NAR) and group life based on premium

Note: some figures may not add due to rounding

U.S. IL New Business Volumes ($ Billions) U.S. Group In Force Premium ($ Millions) $600 $5,000 $4,490 $498 $506 $4,500 $500 $4,000 $3,462 $3,500 $400 $3,000 $300 +2% -41% -1% $2,500 $2,000 +6% +30% $200 $169 $1,500 $101 $1,000 $777 $821 $100 $7 $7 $500 $0 $0 Recurring Portfolio Retrocession Recurring Portfolio

Canada IL New Business Volumes ($CA Billions) Canada Group In Force Premium ($CA Millions) $180 $171 $168 $900 $835 $160 $800 $140 $700 $120 $600 $100 $500 +2% -19% -11% -96% $80 $400 $60 $300 $40 $200 $19 $104 $93 $20 $9 $7 $100 $32 $0 $0 $0 Recurring Portfolio Retrocession Recurring Portfolio 2017 2018 © 2019 Munich American Reassurance Company. All Rights Reserved. 2018 Life Reinsurance Survey 4 U.S. individual life new business A brief history… U.S. individual life recurring new business

1986 1995 2005 2018

# of 30 25 15 9 Reinsurers

Recurring NB $156B $268B $844B $506B

▪ Transamerica ▪ Transamerica Re ▪ RGA Re ($183B) ▪ SCOR ($115B) Occidental ($28B) ($41B) ▪ Scottish Re Top ▪ RGA Re ($94B) ▪ Lincoln National ▪ Lincoln National ($131B) Reinsurers Life ($17B) Life ($34B) ▪ Swiss Re ($94B) ▪ Transamerica Re ▪ General Re ($16B) ▪ RGA Re ($24B) ($130B) ▪ Munich Re ($93B)

Annual Percentage Change in U.S. Recurring new Business

20.0%

12.3%

10.0% 8.9%

1.7% 0.0% -0.5% -3.4% -3.5% -4.7% -10.0% -9.4% -8.7%

-15.3% -20.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

U.S. Individual Life Insurance Sales (Face Amount)

$2,000 40%

$1,800 35% $1,600 34% 29% 29% 30% $1,400 30% 28% 27% 27% 27% 27% 25% $1,200 25%

$1,000 20%

$ Billions $ $800 15% $600 10% $400

$200 5%

$- 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Amt Reinsured $596 $505 $461 $445 $443 $422 $407 $457 $498 $506 Amt Retained $1,149 $1,168 $1,211 $1,234 $1,197 $1,168 $1,240 $1,233 $1,225 $1,231 % Reinsured 34% 30% 28% 27% 27% 27% 25% 27% 29% 29%

Recurring Business ($ billions) 2018 Market Share

Hannover Life Re, SCOR Global Life 115 105 11% SCOR Global Life (US), 23%

RGA 94 89 Munich Re (US), 18% Swiss Re 94 96

Munich Re 93 92

Hannover Life Re 56 66 RGA, 19% Swiss Re, - 20 40 60 80 100 120 140 19% 2018 2017

Recurring Business ($ billions) 2018 Market Share

Optimum Re, 2% General Re, 2% 19 Canada Life 19 PartnerRe, 3%

Canada Life, 14 PartnerRe (Aurigen) 4% 12 Top 5, 89%

13 General Re Life 10

9 Optimum Re 9

0 5 10 15 20 2018 2017

Change 2017 2018 from Company Assumed Assumed 2017 to Market Share Market Share Business Business 2018 SCOR Global Life $105 21% $115 23% 9% RGA $89 18% $94 19% 6% Swiss Re $96 19% $94 19% -2% Munich Re $92 19% $93 18% 1% Hannover Life Re $66 13% $56 11% -14% Canada Life Re $20 4% $20 4% 0% PartnerRe (Aurigen) $12 2% $14 3% 17% General Re Life $10 2% $13 2% 20% Optimum Re $9 2% $9 2% -6% Total $498 100% 506 100% 2%

Top five companies now represent 89% of market share

U.S. portfolio business

1,200

$1,042

1,000

800 $777 $729

$628

600 U.S. $ (billions) U.S. $

400 $344

$238 200 $169 $130 $94 $101

- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

250

$203 200

150

100

$15 $9 $7 $8 $7 $5 $8 $7 $7 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

© 2019 Munich American Reassurance Company. All Rights Reserved. 2018 Life Reinsurance Survey 13 Canada individual life new business A brief history … Canada individual life recurring new business ($CA)

1986 1995 2005 2018 # of 14 14 7 7 Reinsurers Recurring $9B $17B $110B $171B NB

▪ Munich Re ($3B) ▪ Munich Re ▪ Swiss Re ($4B) ▪ Munich Re ($49B) ($46B) ▪ Canadian Re Top ($2B) ▪ Munich Re ($4B) ▪ RGA Re ($31B) ▪ RGA Re Reinsurers ($42B) ▪ St. Lawrence ▪ RGA Re ($3B) ▪ Swiss Re ($26B) Re ▪ SCOR ($27B) ($1B)

Canada Recurring Individual Life Volume ($CA Billions)

$300

75% 65% $250 70% 70% 64% 67% 61% 62% 61% 58%

$200

$150 $CA Billions$CA

$100

$50

$0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Amt Reinsured $152 $153 $153 $149 $143 $142 $153 $160 $168 $171 Amt Retained $52 $66 $67 $84 $90 $87 $98 $116 $92 $83 % Reinsured 75% 70% 70% 64% 61% 62% 61% 58% 65% 67%

Recurring Business ($CA billions) 2018 Market Share

Hannover 46 Optimum Re, Life Re, 3% Munich Re 42 7% Munich Re 42 (Canada), RGA Re 44 Swiss Re, 27% 27 9% SCOR Global Life 23

24 PartnerRe 19 PartnerRe, 16 Swiss Re 28 14%

12 Optimum Re 10 RGA Re 6 Hannover Life Re 2 SCOR (Canada), Global Life 24% 0 10 20 30 40 50 (Canada), 2018 16%

Pacific Life, $4.0

Berkshire Hathaway, $2.9

AXA Equitable, $0.04

U.S. Inforce Premiums ($ millions USD) Canada Inforce Premiums ($ millions CA)

$1,000

$105 $103 $104 $104 $102 $101 $821 $798 $100 $800 $777 $93 $728 $691 $646

$600 $546

$400 $50

$200

$0 $0 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018

Inforce Premiums ($ millions) 2018 Market Share

329 Swiss Re 326 All Others, Swiss Re, 212 Munich Re 197 13% 40%

174 RGA 161

Group Reinsurance 34 Plus 37

32 SCOR Global Life 21 RGA, 21% 32 General Re 27

7 Hannover Life Re 8

1 Canada Life Re 1 Munich Re, Optimum Re 0.2 26% 0.4 2018

© 2019 Munich American Reassurance Company. All Rights Reserved. 2018 Life Reinsurance Survey 21 Canada group life recurring in force premiums (Top 3 account for 94% of market) Inforce Premiums ($ millions CA) 2018 Market Share

50 SCOR Global Life, 3% Munich Re 51 Optimum Re, 4%

19 Munich Re, 54% RGA 21 Swiss Re, 19%

17 Swiss Re 26

3 Optimum Re 6 RGA, 21%

3 SCOR Global Life 1 2018 2017

• Direct life sales, the economy and regulation, in addition to the reinsurance ceding practices. • Direct writers’ appetite for financial reinsurance and reinsurance of in force blocks is not expected to wane in 2019. • In the U.S., Principle-Based Reserving still presents some uncertainty in terms of how this reserve regulation will impact life reinsurance. • Life insurers continue to look for ways to expand insurability to those that are uninsured or underinsured through the use of streamlined or accelerated underwriting programs and technology. • Reinsurers with expertise in these areas are well-positioned to capitalize on the new life sales generated by these programs.