Independent Life Insurance Company,  an insurer that solely underwrites structured settlement annuity products, announced in January 2021 that it had entered into a Reinsurance Agreement with Hannover Life Reassurance Company of America. Hannover Re is rated rated A+ by A.M. Best. In accordance with the reinsurance agreement, effective October 1, 2020  Hannover Re US agreed to reinsure a percentage of Independent Life's in-force business and new business.  This is often referred to as quota share reinsurance.

What is Reinsurance?

Enter into reinsurance agreements is a risk mitigation technique used by insurers to insulate them (at least in part) from the risk of a major claims event. With reinsurance, one company passes on ("cedes") some part of its own insurance liabilities to the another insurance company. The company that purchases the reinsurance policy is known as the "ceding company" or "cedent" or "cedant" under most reinsurance arrangements. The company issuing the reinsurance policy is referred to as the "reinsurer". Reinsurance is sometimes used to reduce the ceding company's capital requirements, or for tax mitigation or other purposes.

What is the Quota Share on the Independent Life/Hannover Re US Reinsurance Arrangement?

According to an FAQ published by Independent Life Insurance Company and confirmed with an executive this morning , that percentage is currently 75%. This amount is an increase from the initial reinsurance amount  of 65% from 2020.  Independent Life has maintained very clearly that it (Independent Life) remains 100% responsible for the benefit payments to the structured settlement payees and will continue to administer these payments.   Hannover Re US will reimburse Independent Life for the reinsured portion of these payments  (75%). 

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PRO TIP

No structured settlement annuitant will have a direct claim with the Independent Life's reinsurer, Hannover Re

No consumers should be confused by any advertising by settlement planners or settlement consultants that states or implies the contrary. Unfortunately some settlement planners  have included the reinsurer and its rating as window dressing on their wesbites and in competitive situations.

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What Independent Life said when Reinsurance program was introduced

"This is an important element of Independent Life's overall capital plan," shared James D. Atkins, Chief Executive Officer of Independent Life. "This arrangement will provide additional protections for our customers while facilitating the future growth of our business." This transaction is not expected to change the way Independent Life prices or underwrites its structured settlement annuity products. Independent Life will still be known for its competitive pricing resulting from its detailed medical underwriting. Independent Life will continue to maintain appropriate controls to manage its business risks and protect the long-term interest of its payees.

What Hannover Re US said when Reinsurance program was introduced

"Hannover Re US is committed to expanding reinsurance support for the broader annuity market. We are excited to partner with Independent Life and applaud the effort and the mission of the structured settlement industry," said Peter Schaefer, Chief Executive Officer for Hannover Re US.  "Independent Life provides Hannover Re US with a platform to participate in an industry that improves the lives of personal injury victims and their families."

The addition of the reinsurance agreement with Hannover Re US will enhance Independent Life's ability to continue to develop innovative solutions for the structured settlement industry. Independent has made other recent announcements of secured  financial investment as it strives to continue an ambitious plan of growth.

About Independent Insurance Group

Independent Life Insurance Company, a subsidiary within Independent Insurance Group LLC, was named the second fastest growing U.S.-based life insurer in 2019 by S&P Global Insights. The company is the first annuity provider to focus exclusively on the structured settlement market to help personal injury victims and their families. Independent Life Insurance Company's goal is to provide trustworthy, competitive and innovative annuity products that professional consultants can easily integrate with other financial products and governmental benefits to produce optimum settlement planning solutions for personal injury victims and their families. Independent LIfe has earned the following Tier 1 ratings

Following the announcement of the reinsurance arrangement with Hannover , Independent Insurance Group, LLC announced in January 2021, that it had signed a definitive agreement for the acquisition of Sterling National Life Insurance Company, which opens up additional licensing avenues and in February 2021, announced that there has been a definitive agreement for an investment by Kilter Finance, an insurance focused specialty finance company backed by KKR.

About Hannover Re

Hannover Life Reassurance Company of America (Hannover Re US), which is licensed and/or accredited in all 50 states, the District of Columbia, Puerto Rico and Guam, is one of the North American life and health reinsurance subsidiaries of the Hannover Re Group. Hannover Re Group, with gross premium of more than EUR 24.5 billion in 2023, is the third-largest reinsurer in the world. Hannover Re - Annual report: Hannover Re beats full-year earnings target and raises dividend (hannover-re.com)

Hannover transacts all lines of property & casualty and life & health reinsurance and is present on all continents with more than 3,000 staff and a network of more than 150 subsidiaries, branches and representative offices. The ratings agencies most relevant to the insurance industry have awarded Hannover Re very strong insurer financial strength ratings (Standard & Poor’s AA- “Very Strong” and A.M. Best A+ “Superior”).

Be Mindful of Misleading Claims About Financial Ratings and the Reinsurance in Some Settlement Planners' Sales Pitch and Ads

It had come to my attention when this blog was first published in 2021 that some settlement planners had left the nature of the reinsurance and ratings in a bit of a blur in sales pitches to promote placement of sales of Independent Life structured settlement annuities. The same specious claim has come up in a split funded proposal of late in which Independent Life was one of the split funding annuity markets.

If financial ratings are being used in a sales pitch and an Egan Jones rating is not the same as an an A.M Best rating or a Moodys rating. If the reinsurer has an A+ AM Best rating it does not give the reinsured an A+  A.M. Best rating, or,in this case any A.M. Best rating at all. The reinsurers rating does not apply to the reinsured when the reinsured must pay 100% of the claims to be reimbursed.

Last updated April 24, 2024

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