Defined terms for the annuity market and lifetime income landscape.
Reinsurance is the practice by which one insurance company transfers part of the risk it has underwritten — and the corresponding share of premium — to another insurance company called the reinsurer, in order to manage its risk exposure and capital requirements.
Reinvestment risk is the risk that coupon income and maturing principal from a fixed income portfolio must be reinvested at yields lower than the yields at which the assets were originally acquired, compressing portfolio yield and the spread on insurance carrier contract liabilities.
Related-party investment is an asset held in an insurance carrier's general account in which the asset, the issuer, or the asset manager is affiliated with the carrier's ownership group, governed by state insurance holding company act provisions on intra-group transactions.
Replacement rate is the ratio of retirement income to pre-retirement income, used as a planning target for how much of working-years earnings need to be replaced by retirement resources to maintain a comparable standard of living.
Replacements and exchanges is the category of transactions in which an existing annuity contract is replaced by a new annuity contract, governed by state regulatory rules that impose specific disclosure, comparison, and documentation requirements.
