The current global life reinsurance sector is characterized by growth opportunities alongside a cautious stance on risk, according to a new report from KBRA.
The report finds that excess mortality linked to the COVID-19 pandemic has largely subsided, allowing life portfolios to normalize. At the same time, growth in asset-intensive reinsurance, particularly annuity-focused business, continues to accelerate across major markets.
KBRA said this expansion is “unlocking substantial pools of capital seeking attractive, uncorrelated returns to better address the retirement savings gap.” The agency views the retirement savings gap as a key driver of new business volumes for primary life and annuity writers, which in turn is sustaining demand for asset-intensive reinsurance across geographies.
The report identifies five trends it believes will shape the sector and assesses their implications for the industry’s credit profile. As morbidity and mortality revert toward historical averages, KBRA expects core life insurance portfolios to generate higher returns, while the impact on annuity books will be more mixed and closely tied to movements in long-term interest rates.
Overall earnings for life reinsurers and asset-intensive platforms will remain sensitive to rate volatility. Changes in long-term yields influence spread income and the economic value of long-duration liabilities, making asset-liability management central to performance.
Demographic pressures and the global retirement savings gap are expected to remain tailwinds for life and annuity product sales. KBRA said these forces will continue to support reinsurance demand as primary carriers use balance sheet and capital solutions to manage growth in long-dated guarantees.
Global reinsurers more broadly face a different backdrop in 2026, with Fitch Ratings expecting profitability to decline next year even as earnings remain at what it describes as sound levels. Fitch has maintained a “deteriorating” sector outlook after Jan. 1 renewals confirmed further reductions in risk-adjusted prices across most lines.
KBRA also highlighted the impact of evolving regulatory and solvency regimes on life reinsurance. It said increased scrutiny of alternative assets and cross-border structures is influencing how jurisdictions assess capital adequacy and risk transfer.
According to the report, Bermuda has become a central hub for asset-intensive reinsurance, supported by what KBRA characterizes as an adaptive and responsive regulatory environment.
The agency said recent headlines around private credit underscore risk considerations, but “insurers with robust risk and asset/liability management frameworks are positioned to capitalize on the market’s rapid growth,” viewing private credit as a meaningful long-term tool to help meet policyholder obligations when managed within clear limits.
