Shifting landscapes: life insurance and financial stability

Fabian Garavito, Ulf Lewrick, Tomas Stastny and Karamfil Todorov

BIS Quarterly Review, 2024

Abstract: The past decade's low rate environment challenged traditional life insurers' business models and has been a catalyst for ongoing shifts in the sector. To sustain profitability, life insurers have increased exposures to riskier and less liquid asset classes. Some have also offloaded risks through complex reinsurance agreements, often to offshore centres, partly with an eye to economising on capital. Private equity firms have been a driving force behind these trends. They have funnelled investment into private markets by acquiring or partnering with life insurers or assuming insurance portfolios through affiliated reinsurers. While more diversified investments and greater risk-sharing can, in principle, support insurers' resilience, losses in private markets could propagate risks across an increasingly interconnected and complex insurance landscape.

JEL-codes: G22 G28 G32 (search for similar items in EconPapers)
Date: 2024
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