Authors: Wei Hou Jeffrey Seow Andrew Edelsberg
Asset Intensive Reinsurance (AIR), also known as funded reinsurance, is an increasingly popular strategy for insurers navigating capital constraints and regulatory demands. It offers a way to transfer biometric and market risks while managing counterparty risk and contractual obligations. Gallagher Re's latest newsletter provides a comprehensive exploration of AIR trends across the US, EMEA, and APAC regions.
In the US, AIR has evolved significantly over the past 15 years, with over 30 reinsurers now active in the market. It is widely applied to life insurance, annuities, pension risk transfers, and long-term care insurance. Rising interest rates and equity market volatility have driven demand for fixed-rate annuities, creating competitive dynamics intensified by private equity firms entering the market. Gallagher Re supports insurers by providing market intelligence, counterparty risk analysis, and structural protections to ensure long-term transaction success.
In EMEA, AIR is well-established in the UK, driven by the Bulk Purchase Annuity (BPA) market, while Continental Europe faces regulatory inconsistencies and product complexities. AIR enables BPA insurers to bid on larger pension schemes and helps savings product insurers manage capital strain from high guaranteed returns. Gallagher Re assists insurers in navigating regulatory frameworks, optimizing capital, and addressing supervisory expectations.
In APAC, AIR is rapidly growing, with key markets in Japan, Hong Kong, and Singapore. Insurers benefit from capital optimization, yield enhancement, and expanded market capacity. However, challenges such as asset-liability mismatches and regulatory diversity persist. Gallagher Re leverages local expertise to structure transactions, analyze capital impacts, and facilitate cross-border communication.
Gallagher Re's global expertise and strategic execution process empower insurers to optimize capital, enhance product competitiveness, and mitigate risks, delivering tailored solutions across diverse markets.
