Q&A: Exploring Asset-Intensive Reinsurance with Craig Buck
By Ronald Poon Affat
Reinsurance News, February 2025
Craig Buck is the CEO of Converge Re, an asset-intensive reinsurer domiciled in Puerto Rico. He assumed that role in May 2024. Mr. Buck has been in the insurance industry for over 30 years in various executive roles in consulting, insurance and reinsurance. Immediately prior to joining the team at Converge, Mr. Buck was the managing principal of EY’s Insurance Actuarial and Advisory Services practice.
Q: First of all, how are you settling into the somewhat new role?
Craig: Thank you for asking. It has been a lot of work, and a ton of fun, getting to know the people and the business here at Converge. I would say everything is going very well!
Q: Asset-intensive reinsurance has been a hot topic in the industry, but some insurers are still unfamiliar. How would you explain it to someone new to the concept?
Craig: Asset-intensive reinsurance is simply reinsurance of businesses which require significant levels of reserves and capital making the performance of the assets the most significant determinant of profit or loss. Biometric reinsurance often covers mortality/morbidity/longevity but not necessarily the investment and reinvestment risk that is the focus of asset-intensive reinsurance. Unlike biometric reinsurance where you typically pay a ceding commission to the reinsurer since you transfer risk to the reinsurer, under asset-intensive reinsurance you receive a cede from the reinsurer so they can manage the assets.
Asset-intensive reinsurers typically center on generating superior returns on investments. They find and manage asset classes with strong risk-return profiles—assets that can sometimes be more difficult for direct writers to source. Plus, they emphasize asset-liability management (ALM) and liquidity management. They also often have structural advantages like captives or being domiciled in offshore jurisdictions, which allow them to manage capital more efficiently than direct writers.
Q: What’s the draw for insurers with in-force blocks?
Craig: There are a number of benefits. First off, it frees up capital, which can be redeployed into areas more aligned with the insurer’s core business. Capital can be freed up both from the transfer of risks to the reinsurer and the monetization of future expected profits on the ceded business.
Another potential advantage is enhancing policyholder benefits—thanks to the reinsurer’s investment expertise, insurers may be able to offer higher credited rates.
And let’s not forget the operational side. Reinsuring closed, legacy books can allow insurers to shift focus to the parts of their business that matter most for growth as opposed to spending management time on legacy businesses.
Q: What about new business?
Craig: The draw for new business is in improving capital position and increasing the capacity to write new business. When you reinsure a portion of your new business, you reduce the capital strain and often get a ceding commission to offset the strain on the business you retain.
Let me give you a perhaps over-simplified example—Say you’ve got $1,000 in new business with a 10% capital strain—that’s $100 of strain. If you reinsure 80%, you transfer 80% of that strain, or $80, to the reinsurer. Add a 2% ceding commission on the premium ceded, and you also get $16. Now you’re looking at just $4 in strain instead of $100. Of course, the math is a bit more complicated than that as not all the capital charges are linear, but that is the basic idea.
This gives insurers the capacity to write more business, spread fixed costs over a larger base, and scale faster. By providing capacity to write business, it can mitigate the need to increase and decrease credited rates in order to dial sales up or down, which can be a key for maintaining good relationships with distributors.
Q: Got it! But you also mentioned non-financial benefits. Tell me more about those.
Craig: One of the biggest perks is having a true partner in your reinsurer. They’re not just taking on risk—they’re offering guidance. They can help with product development, regulatory filings, reserving assumptions, compliance, strategy around managing non-guaranteed elements—you name it.
Reinsurers also bring a second set of eyes to pricing models and assumptions, which can be incredibly helpful. They work with so many clients, so they’ve got a great pulse on market trends and can share that intelligence.
And of course, there’s also the investment expertise often brought by asset-intensive reinsurers. They bring access to asset classes and strategies that insurers might not have internally, along with structural efficiencies that can make a huge difference in efficiently managing capital. They also often bring deep expertise in risk management of asset-intensive businesses; in particular asset-liability management, liquidity management and credit risk management.
Q: Okay, Craig, before we wrap up, I want to pick your brain. What advice would you give to actuaries who want to shine in front of the C-suite?
Craig: Great question. Actuaries already bring a lot to the table, but to really stand out, they need to connect the technical with the strategic.
Start by understanding the big picture. What’s the company’s direction? How does your work support that vision? Then, focus on communication. The C-suite doesn’t want to see endless spreadsheets—they want actionable insights. Tell a story with your data—what does it mean, and what should we do about it?
And finally, don’t shy away from challenging assumptions. A good actuary isn’t just a number cruncher—they’re a strategic thinker who helps guide critical decisions. Be that bridge between the technical and the strategic, and you’ll be invaluable.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.
Ronald Poon Affat, FSA, FIA, MAAA, CFA, HIBA, is co-editor of the Society of Actuaries newsletter, Reinsurance News. Ronald can be contacted at rpoonaffat@gmail.com and/or https://www.linkedin.com/in/ronaldpoonaffat/.