The American Council of Life Insurers President and CEO David Chavern responded on April 10 to the recent A.M. Best report on annuity reserves, highlighting what he described as omissions in the assessment of the life insurance industry’s stability and performance.
Chavern said that the A.M. Best report did not acknowledge how life insurers managed a significant challenge during the COVID pandemic, stating, “The A.M. Best report on annuity reserves makes no mention of how life insurers successfully managed a major recent test during the COVID pandemic, paying a record $100 billion in benefits while maintaining capital well above regulatory requirements—levels companies sustain today.”
He addressed concerns about private credit holdings by some insurers, noting their role in meeting product demand and supporting long-term liabilities. “In recent years, some life insurers have increased their holdings of private credit to meet increased demand for their products. These assets offer attractive returns and portfolio diversification while supporting long-term liabilities. However, there is no evidence that private credit is straining thelife insurance industry’s stability. In fact, a recent S&P report found that companies are responsibly handling the liquidity and complexity risks associated with these assets,” Chavern said.
Chavern also commented on regulatory oversight: “Also missing from the AM Best report is mention of the long-term, effective oversight of state regulators. Since the financial crisis, regulators through the NAIC have improved their oversight with new tools and transparency measures that ensure the industry is financially strong and mitigate risks to policyholders and the financial system.” He added that demographic trends will increase demand for retirement security products over coming years: “Between now and 2030, 20 million Americans will reach age 65, increasing the demand for financial security guarantees. Through sound investment practices and strong regulation, life insurers are well-positioned to meet this need.”
