Analyzing Liability Risks for Life Insurers

Research evidence excerpt

Analyzing Liability Risks for Life Insurers

Financials | Global Insurance - Life

June 30, 2026

Thomas Gallagher, CFA Analyzing Liability Risks for Life Insurers

212-446-9439 A robust risk transfer market has emerged for the US life insurance

Thomas.Gallagher@EvercoreISI.com industry over the last 3-4 yrs and facilitated a number of risk transfer

David Motemaden, CFA deals and reduced tail risk for certain higher risk products, such as long-

212-497-0832 term care (LTC), variable annuities (VAs) with living benefits, and

David.Motemaden@evercoreisi.com

universal life insurance with secondary guarantees (ULSG).

Nicolas Lu

212-497-0812 While we expect more activity going forward, we also think it’s important

Nicolas.Lu@evercoreisi.com to evaluate and assess remaining exposures for valuation purposes, as

Peter Knudsen significant risks remain outstanding.

212-708-8497

Peter.Knudsen@evercoreisi.com Since we don’t think asset risk is where the real tail risk lies in the sector,

it’s still liability risk – we regressed tail risk against valuation and note

the following observations:

1. EQH / CRBG is the biggest outlier and a move to the regression

line implies a doubling of its multiple since it has de-minimis

remaining liability tail risk

2. The other retail annuity-focused companies, LNC and JXN, are

roughly on the line despite the cheap valuation, reflective of their

outsized tail risk exposure (300-400% of market cap)

3. While both MFC and UNM have re-rated higher somewhat after

executing LTC risk transfer deals, MFC has been outsized vs. UNM

(and now trades at a 20% PE premium), yet both companies have

similar remaining exposures (both close to 100% of market cap)

and we think UNM’s remaining exposure is more likely to shrink

materially over the next 6 mos.