Capital-Motivated Reinsurance

Traditional risk transfer is only one way that RGA helps its clients meet financial objectives. In addition to reinsuring a wide range of life products, RGA helps clients tackle difficult capital-planning problems through the use of financial reinsurance, also known as capital-motivated reinsurance. RGA has assembled the finest team in the industry and is dedicated to helping clients with these capital issues. These experienced actuarial and financial professionals are recognized as leaders in the financial reinsurance industry. Their in-depth knowledge of regulatory issues and a dedicated actuarial and accounting staff bring true value-added services to RGA’s clients.

Reinsurance is one of the most flexible and efficient financial-management tools available to a life insurance company today. RGA pioneered the use of reinsurance as a financial-management tool and can assist clients in evaluating the merits of using financial reinsurance. RGA considers different reinsurance models to suit clients’ individual needs, and models "what if" scenarios to demonstrate how reinsurance can be used, allowing clients to achieve a more efficient deployment of capital and to enhance returns on capital invested.

A wide range of financial management needs can be met through capital-motivated reinsurance. Below are just a few of the ways in which RGA can assist clients with capital-planning issues:

• Support sales growth
• Offset strain caused by acquisition costs
• Improve product ROE by decreasing amount of capital supporting it
• Reduce cost of capital
• Attractive cost when compared with other forms of capital, such as equity
• Unlock capital invested in a low-return product and redeploy to a better-performing product

While a company may need to raise additional outside capital to fund growth, a well-structured reinsurance program can offer the following advantages over financing alternatives:

• Flexibility of duration
• Flexibility of size
• Flexibility of structure
• Minimal transaction costs
• Risk protection beyond capital investment
• Lower risk-based capital requirements