Resilient insurers, powered by innovative, long-dated private capital, and operating under strong globally recognised regulatory regimes, are the solution to an ageing population with longer lifespans and shrinking public safety nets, Chairman Natasha Scotland Courcy stated at the BILTIR Bermuda conference.
“By 2030, one in six people worldwide will be over the age of 60, up from one in eight in 2020. That means there’ll be about 1.4 billion people over 60 by 2030, rising to 2.1 billion by 2050. Life expectancy is also increasing, with the global average rising to 73 years in 2019, up from 64 years in 1990. And is expected to reach 77 by 2050,” said Courcy.
Adding: “Meanwhile, the share of retirement assets in defined benefit pensions in advanced economies has fallen sharply from 47% in 2001 to just 31% by 2024, shifting more longevity and investment risk directly to individuals. Put simply, an ageing population creates a dire need for reliable retirement income solutions. It requires capital.”
According to Courcy, this much needed capital is not coming from government balance sheets, but from long dated investment grade private capital, which are a natural fit for insurers due to their long-dated liabilities.
She pointed to a growing $4.8 trillion global private credit market focused on financing the real economy, including infrastructure, housing, and corporate growth.
The executive also noted the emergence of innovative co-investment vehicles like life insurance sidecars.
These structures, she explained, “invite long-term horizon third-party equity into the retirement system,” acting as “capacity multipliers” that are tax efficient and fully consolidated while maintaining prudential strength.
“We’re not waiting for perfect conditions. Why would we do that? We’re actually engineering them. We’re creating them, marrying high quality, private credit sidecars, expanding capacity responsibly and where insurers and channel global savings into long-term projects that directly serve the retirees,” Courcy stated.
BILTIR’s Chair also underscored Bermuda’s pivotal role in this “retirement gap story”. She said: “Today, Bermuda-based long-term insurers manage over $1 trillion in assets…with 92% of those assets rated investment grade, and 77% of them protected in secured funds withheld in modco accounts.”
A BILTIR white paper published last year further solidifies this confidence, Courcy added, showing that member companies are well-capitalised with quality assets.
The survey revealed that assets in the industry exceeded liabilities by $231 billion, and 95% of assets were invested in investment-grade bonds, debentures, and structured assets.
Courcy also stressed Bermuda’s regulatory framework, recognised by the NAIC (National Association of Insurance Commissioners), as a qualified and reciprocal jurisdiction and by Europe as a Solvency II equivalent jurisdiction, makes it “one of the most trusted platforms for capital deployment.”
She also emphasised that the concentration of long-term reinsurance in Bermuda does not pose a systemic financial risk.
A recent Oliver Wyman report shows that Bermuda reinsurers hold broadly similar asset allocations to US life insurers, Courcy added.
“Bermuda isn’t a source of systemic fragility, it’s a source of systemic strength for closing this retirement income gap,” she stated. Adding: “Here’s what this purpose and resilience and Innovation means for policyholders: broader menu of guaranteed income products, with credit rates that benefit from access to high quality, private assets.
“Across the industry the shifts to what match funded investment grade private credit has delivered additional spread without additional credit risk, helping consumers accumulate more secure retirement savings over time.”
Courcy also addressed the need for continued regulatory progress, particularly regarding asset intensive reinsurance and private credit exposures.
She said: “With growth comes scrutiny, that’s expected. There’s been heightened regulatory focus on asset intensive reinsurance and on private credit exposures. And while we always welcome thoughtful oversight I believe the end goal here should be simple: equal capital for equal risk, and leveraging jurisdictional best practises through cross-border supervision.
“Bermuda’s regulatory enhancements are an essential component to the global effort. The BMA’s proposal to require public disclosure of assets and liabilities for commercial long-term insurers will bolster market discipline and provide stakeholders with clearer insight into the nature and quality of investments, being backed by long-dated liabilities.”
Courcy further highlighted the importance of jurisdictional integrity and transparency, arguing that strong, well-regulated markets benefit everyone
“It’s the right move at the right time and it’s consistent with Bermuda’s long record of measured principles-based supervision. Policy makers outside of Bermuda, one lesson is clear, jurisdictional integrity matters,” she stated.
Continuing: “When standards align with economic risk and supervisory, expectations are transparent high quality capital flocks to the places where it can do the most good funding, retirement liabilities modernising infrastructure and supporting the productive capacity of the real economy. And that’s happening right here in Bermuda.”
Courcy suggested that other jurisdictions “should look to the US and Bermuda for best practises. Proof that strong oversight, scalable retirement solutions can and should advance together.”
She concluded that the current moment presents both a challenge and an opportunity, given the need for resilient insurers “powered by innovative long dated private capital operating under strong globally credible regulatory regimes,” to address an ageing population and shrinking public safety nets.
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