No one ever asked U.S. retirees whether they’d like to have their nest eggs moved offshore, or put in the hands of a non-U.S. regulator.
Josh Wander, a co-founder of 777 Partners, at a soccer match in Belgium in April 2022. Without meaning to, the world’s soccer fans and sportswriters have opened a window into the secretive but influential world of Bermuda reinsurance. Just a glimpse is enough to raise concerns about the retirement security of millions of Americans.
To understand how this happened requires a bit of background on old-fashioned company pension plans, annuities and how life insurers work with reinsurers. The United States’ big private-equity firms have gotten into the annuities business and have been moving it offshore. Apollo Global Management was the pioneer, with a big Bermuda-based reinsurance division, Athene. Annuities mean cash flow, because the people who buy them pay premiums to keep their contracts in force. Apollo made so much money investing all of Athene’s premiums that soon many other private-equity firms were setting up offshore reinsurers and doing the same.
The Bermuda Monetary Authority quietly put 777 Re under administrative control, and A.M. Best, a specialty ratings firm, downgraded it in two steps from A-minus to C-minus — close to a death sentence. No one can do business with such a weak reinsurer.When a reinsurer is in trouble, the problem can spread. Its life-insurer counterparties can’t very well leave their blocks of business there, so they take them back — if they can without being swamped.
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