Washington, D.C., (December 15, 2014) — Life insurers are financially strong, with more than $5 trillion in assets. They pay out $1.5 billion daily to policyholders and beneficiaries. They invest conservatively and represent the number 1 purchaser of U.S. corporate bonds, which helps lay the foundation for business growth and job creation in America.

Reinsurance transactions with affiliated subsidiaries, which are sometimes called “captive” reinsurers, are an important component of risk management. These long-standing transactions are a legitimate, safe, and cost-effective means of fully satisfying reserve requirements. They help make life insurance more affordable than it would be without them. Strict regulatory oversight ensures that life insurance companies use reinsurance subsidiaries appropriately to meet their promises to policyholders, and the reinsurance subsidiary responsible for the claims under the contracts is eligible for a tax deduction for the reserves relating to the claims.

We continue to work with our regulators to assure that these reinsurance transactions are appropriately disclosed and accounted for uniformly from state to state.

The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association with approximately 300 member companies operating in the United States and abroad. ACLI advocates in federal, state, and international forums for public policy that supports the industry marketplace and the 75 million American families that rely on life insurers’ products for financial and retirement security. ACLI members offer life insurance, annuities, retirement plans, long-term care and disability income insurance, and reinsurance, representing more than 90 percent of industry assets and premiums. Learn more at www.acli.com.