The United States has adopted a new actuarial rule tightening oversight of asset-intensive life reinsurance, a move that could reshape how American insurers structure and report their Bermudian-based deals.

Actuarial Guideline 55, approved in August by the National Association of Insurance Commissioners, will require American cedants to show that liabilities transferred offshore remain fully supported by assets under “moderately adverse” conditions — placing fresh attention on the reserves backing some of the world’s largest reinsurance structures.

The rule expands asset adequacy testing to reinsured blocks for the first time. Cedants must now look at the full obligation after reinsurance, review the assets backing it, set a clear “starting asset amount” and report their findings in year-end filings. Regulators said the aim is to make any reserve reductions tied to offshore deals “observable, traceable and explainable”.

Poojan Shah, of Willis Towers Watson, said the guideline is designed to “bring greater transparency to how reinsurance affects reserve adequacy”, noting that some structures have materially reduced US statutory reserves without clear evidence that assets would hold up under stress.

Bermuda is the world’s largest centre for offshore life and annuity reinsurance, with more than $900 billion in American liabilities held by Bermudian-based reinsurers, over 80 per cent of the offshore total.

AG 55 creates new duties for their US partners, who may now need more detailed information on asset portfolios, assumptions, liquidity and how cash flows will support future claims.

Even with Bermuda’s status as a “reciprocal jurisdiction” — which removes collateral requirements for US insurers — cedants must still demonstrate that ceded liabilities are well supported. That could influence treaty terms, including data access and how modelling work is shared.

Recent BMA publications suggest the regulator has already been looking closely at many of the same issues. In its March 2025 Insights and Reflections on Asset Intensive Reinsurance in Bermuda, the authority said: “The complexity and long-term nature of life and annuity business expose insurers to evolving risks, including shifts in shareholder objectives, policyholder behaviour, investment conditions and regulatory landscapes.”

It added: “Bermuda continues to provide a well-established ecosystem that enables AIR to operate in a safe and sustainable manner over the long term.”

It reported a median solvency ratio of 259 per cent for asset-intensive reinsurers at the end of 2023, “which far exceeds the regulatory minimum solvency ratio of 100 per cent”.

The BMA also emphasised the importance of strong oversight, noting that “through continuous regulatory enhancements, the BMA ensures Bermuda's reinsurance framework remains robust, transparent and aligned with global best practices”.

In April, the authority updated its Prior Approval of New Long-Term Block Reinsurance Transactions notice, requiring cedants to reconcile differences between the US total asset requirement and the Bermuda Economic Balance Sheet. It said the insurer must provide “capital requirements and the associated breakdown of the key drivers”, as well as target solvency ratios, excess capital and surplus and best estimate liabilities and risk margin.

Together, these publications show that Bermuda already applies close supervision to asset-intensive business, though AG 55 may increase the amount and type of information its American partners will need.

The new guideline also comes as offshore life reinsurance comes under more scrutiny in the United States.

A recent Wall Street Journal report on the Cayman Islands said $75 billion in American liabilities had been reinsured there, part of more than $1.1 trillion ceded offshore in total. Cayman’s industry said the article was misleading, but also acknowledged that “the majority of examples cited relate to transactions in Bermuda”.

The article referred to several Bermudian-based reinsurers and pointed to continuing debate in the US about capital and reserve standards in offshore jurisdictions.

Marc Rowan, chief executive of Apollo, told shareholders earlier this year: “Reserves have moved offshore to the Cayman Islands with a fraction of the capital of the US or the Bermuda system, putting the system at risk.”

Others, including the American Council of Life Insurers, argued that risk remains well contained within the US system.

The first AG 55 disclosures will appear in 2025 year-end statutory filings.

The Royal Gazette has asked the Bermuda Monetary Authority whether it expects AG 55 to influence its supervisory approach or its interactions with US regulators.