Hearing the term “asset-intensive” may cause cold sweats and weakness in the knees for actuaries and other insurance professionals who have spent much of their careers focused on the liability side of the balance sheet! This is because insurance products under the assetintensive label, such as savings products like annuities, are exposed to more asset risk than they are traditional biometric risk. But as with so many other complex subjects, we can get through the mystique of an asset-intensive transaction by breaking it into its component parts and gaining an understanding of each to then build a complete understanding of the whole. Reinsurance of in-force blocks of business involves many technical aspects that are not often encountered in everyday actuarial and accounting work. The purpose of this guide is to introduce many of these technical aspects, especially from a U.S. statutory perspective, to help the reader begin to put the pieces together.

Why is this understanding important? In the United States, there is currently a strong supply and demand for asset-intensive solutions for in-force blocks of business, especially with all types of annuities. Ceding companies have many motivations to consider reinsuring their in-force asset-intensive business, including capital redeployment opportunities, improving earnings metrics, and managing spread compression. For reinsurers, the motivations include diversifying against biometric risks and/or using reinsurance as a source of funding to pursue investment opportunities. Even in today’s low interest rate environment, the market for in-force assetintensive solutions remains active

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