百慕大长期保险业

June 2nd, 2025 Kristin RicciJames Forbes-KingFaisal Haddad, FSAMatthew Davey, FIA CONTENTS 1. Executive summary3 2. Introduction12 2.1Purpose and structure of this report122.2Economic and social role of (re)insurers122.3Market landscape and trends17 3. Role of Bermuda in the global life insurance market24 3.1History and strategic role for (re)insurer243.2Summary of Bermuda’s regulatory framework and safeguards30 4. Systemic risk and insurance34 4.1Introduction to systemic risk344.2Transmission channels364.3Regulatory landscape and key concerns38 5. Potential for systemic risk in Bermuda long-terminsurance sector 41 5.1Scenario exploration415.1.1Scenario 1: Credit crisis triggering mass reinsurance recapture435.1.2Scenario 2: Confidence shock to the Bermudian insurance market,triggering mass lapse and fire sale of assets705.1.3 Scenario 3: Withdrawal of insurer private credit demand81 6. Recommendations88 7. Appendix90 8. Glossary of acronyms and abbreviations97 SECTION 1 EXECUTIVE SUMMARY Insurers play an important role in promoting policyholder protection, financial security,macroeconomic resilience, and serving both individuals and institutions. They act as a providerof long-term capital, contribute to economic stability, and support access to protection andfunding for households and businesses. Due to this role and the long-term horizon of manyinsurance contracts, insurers have large investment portfolios, in order to make payments topolicyholders in the future. They are therefore significant players — alongside other financialinstitutions — in providing long-term funding to the real economy, financial intermediation,and capital accumulation. The availability and affordability of insurance products is crucial to addressing an estimatedglobal retirement savings gap of ~$70 trillion.1Reinsurance (insurance provided to insurers)provides an important mechanism to access additional capacity to write more new business,with Bermuda a preferred jurisdiction in part due to its status as a global insurance hub andglobally recognised regulatory regime. Bermuda reinsurers now support more than $1 trillionin life insurance reserves. While the expansion of the Bermuda reinsurance sector, including asset-intensive reinsurance,has provided an important source of capital and capacity to global life insurance markets, ithas also drawn attention from global regulators and observers who have noted two importantglobal trends in the life sector: •Increased allocations to private credit assets on life insurer balance sheets•Increased use of asset-intensive reinsurance (AIR), particularly in cross-bordertransactions to jurisdictions such as Bermuda These trends have raised questions as to whether the concentration of risk held by Bermudareinsurers presents a potential “systemic risk.” Oliver Wymanhas been at the forefront of efforts to identify, assess, and analyse the potentialfor systemic risk in the insurance and broader financial services sectors.2We think it is criticalthat this topic remains on the global risk management agenda; it is right that questions areasked as new trends emerge and critical that fact-based and informed analysis are used toanswer these questions. The concept of “systemic risk” gained broad traction following the 2008 Global FinancialCrisis (GFC) to capture the idea that certain risks could threaten the functioning of the overallfinancial system, rather than being isolated to individual institutions. Since then, as regulatorsand other stakeholders have sought to better understand potential sources of systemic risk,there has been convergence around a common set of transmission channels, through whichsystemic risk could propagate through the financial system, that provide an important toolto understand and assess the potential for systemic risk. Four such transmission channels are commonly recognised in the context of the financialservices sector: i) “asset liquidation” — that institutions (including insurance companies) mightbe forced to rapidly sell assets en masse, ii) “interconnectedness” or “exposure” — that thereare important direct and indirect linkages across and between financial institutions (e.g., banks,reinsurers, investment funds), where failure of one can impact another, iii) “critical function” or“substitutability” — that a certain role is essential to the financial system or real economy, andcould not be replaced in the event they stop playing that role en masse, and iv) “contagion” —that a system-wide loss of trust could trigger panic and customer withdrawal, threateningthe system as a whole. SYSTEMIC RISK ASSESSMENT To evaluate the potential for systemic risk arising from the Bermuda long-term insurancesector, we evaluate how the transmission channels could apply to the sector, and undertakea fact-based and analytical assessment of how it might contribute to systemic risk. Inparticular, three hypothetical scenarios are constructed that test the four transmis