Mike Rolfe, Senior Vice President and Strategic Relationship Manager for Global Accounts, talks to Asia Insurance Review about the evolving landscape of life reinsurance in Asia, and how insurers can leverage strategic partnerships and expert insights to capitalize on growth opportunities while addressing unprecedented market volatility and emerging industry trends.
In the future, life insurance companies may focus more on core competencies to drive growth while ensuring sustainable dividends for investors. As RGA's Mike Rolfe told Asia Insurance Review, this translates into a shift towards new strategic partnerships that combine distribution platforms, product manufacturing and asset management capabilities for life reinsurers.
Life reinsurers like RGA saw huge opportunities in the past year and are already seeing this trend continue in the year ahead on the back of primary carriers seeking growth, Mr. Rolfe told Asia Insurance Review. Life insurers operate in competitive markets facing pressure on both investment yields and product design, he said.
When asked what some drivers of the life insurance sector in Asia were, Mr. Rolfe pointed to the growth of the middle class and high net worth segments.
“Even in Japan, a market where the population is shrinking, we are still seeing growth as investment yields move up and demand increases for savings products,” he said.
Return on equity has become “a dominant driver of business performance and share price for our clients, putting pressure on capital efficiency and cash generation for both in-force and new business insurance products."
“This trend has increased the strategic relevance of reinsurance, with clients viewing us as a strategic partner on capital management and not just risk transfer,” he said, noting clients were looking for support with long-term and attractive products.
“We have entered a period of relatively unprecedented volatility which is still playing out,” Mr. Rolfe said in response to a question on the threats to Asia’s life reinsurance market.
He also highlighted that geopolitical concerns and macroeconomic challenges are converging in a way that creates turbulence in the interest rate environment, which directly impacts clients and reinsurers.
“As an example of this, we are seeing China government bond yields falling below those of Japan which would have seemed impossible a decade ago,” he said. “That creates a lot of challenges for companies with a regional footprint who are building for the long-term but seeing some significant short-term profitability challenges.”
Additionally, Mr. Rolfe noted that the health business was facing troubles of its own due to short-term medical reimbursement products being in a tough pricing environment with a combination of medical inflation and some ‘rubber banding’ effects from the end of COVID-19.
“The industry’s long-term health products have liabilities which are directly impacted by evolving health trends and advances in medical technology for both diagnostics and treatment,” he said. On the flip side, he pointed out that mortality “has been much more stable” and that the impact of COVID-19 on long-term trends has not been as significant in Asia as compared to the US market, though he also noted that it could change.
As a result, RGA has been investing in research on emerging trends such as GLP-1 drugs, he said. According to the University of Chicago Medicine, GLP-1 drugs mimic a hormone found in the human body that helps in the control of blood glucose levels and insulin and bolsters a feeling of security. It is effective in weight management.
When asked how reinsurers could capitalise on threats and opportunities to maintain profitability and sustainability, Mr.
Rolfe said that risk and volatility could be an opportunity so long as it was managed “in the right way."
Secondly, he noted that teams of experts and biometric expertise could help monitor both the insurance market and underlying health trends closely.
He said, “This is important so that we can maintain pricing discipline and provide insights to our clients. Some markets in Asia have seen aggressive competition on both price and product design, which has impacted both primary insurers and reinsurers.”
Mr. Rolfe noted that integrated asset platforms and biometric expertise could help reinsurers support clients across Asia with large in-force block transactions and new business opportunities, covering the full spectrum of savings and protection products.
Citing RGA as an example, he said, “We executed our first longevity co-insurance transaction in Japan, successfully closed a number of in-force co-insurance deals in both South Korea and Hong Kong and had great success in combining our asset and biometric expertise to provide new co-insurance business that drives product innovation and maximises the financial returns for our clients."
The increase in asset-intensive co-insurance “has attracted a lot of third-party capital and those markets are becoming increasingly competitive," Mr. Rolfe said, when he was asked how the opportunities and threats affected pricing and capacity in Asia. He also said, “That competition is healthy as it helps establish the market and has pushed regulators to act in opening new markets.”
The advantages of asset capabilities from third-party capital could also be combined with biometric risk expertise to create innovative solutions for clients, he pointed out. He has also observed a shift in risk appetites and available underlying capacity.
As for the coming year, Mr. Rolfe anticipates firstly “an increasing trend of companies focussing on their core competencies, driving growth while ensuring sustainable dividends for investors”.
“That could mean more specialisation and a shift towards new strategic partnerships that combine a distribution platform, product manufacturing and asset management capabilities,” he said.
Secondly, he believes that companies will continue to seek to enter new markets or consolidate existing operations to maximise growth potential and dividend yields. This could translate into further opportunities, as reinsurers “can support the funding or derisking of these transactions," he said.
An established organisational presence could also provide clients with ongoing support as they entered new markets, he said.
That competition is healthy as it helps establish the market and has pushed regulators to act in opening new markets.
This article was originally published in the April 2025 issue of Asia Insurance Review.
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