The Insurance Reckoning with Tom Gober

Tom Gober (0:00)

When you pay your premiums, you really are supposed to be getting rid of risk, you're shedding risk.

But I've shown you pockets of very real risk. And the problem is, it's somewhere out of sight. I do not want the state regulators, when the dominoes begin falling, to say, how could we have known? That's why I sent certified return receipt letters to these people. They are on notice.

George Noble (0:43)

Okay, so we're talking about affiliated investments. Now let's turn to the topic of affiliated reinsurance. And anytime you're hopeful for the folks, just explain first what reinsurance is and then what affiliated reinsurance is.

Tom Gober (0:58)

Unfortunately, it is complicated. It's arcane. It's unique. There's nothing really like it.

Reinsurance is where the insurance company can take some or all of their liabilities and ask a reinsurer, hey, would you take some of these liabilities from me?

George Noble (1:20)

If they, so basically, they're offloading some of the lists.

Tom Gober (1:24)

You're offloading some of the re-assets. So if they say, I want to move $5 billion in liabilities to you, the reinsurer, you're going to want to get roughly $5 billion in assets. You're not going to want to take $1 billion in assets, right?

SPEAKER_3 (1:41)

To cover the $5 billion.

Tom Gober (1:43)

That's why New York has a mirroring rule that whatever you subtract here, you got to set up at least that here.

George Noble (1:51)

Maybe New York has it here. You saw that other states don't have it?

Tom Gober (1:56)

I've never seen it in writing, but I know they're not holding them to it because really, yo, they're stoned.

SPEAKER_3 (2:02)

It's not like that.

George Noble (2:04)

So take a look at this.

Tom Gober (2:06)

Here, I looked at all life and annuity carriers, and this is the most recent sworn annual space, 2025 The total surplus to be, so it's relative, right?

657.9 billion for the affiliated reinsurance, and that means only internal, within the group. You're not going to Munich of Germany, where it has its own huge capital base.

SPEAKER_3 (2:37)

You're going from one pocket to another.

Tom Gober (2:40)

But look, that's all 700 plus, is like 704 Total to 1.5 billion, which is 2.4 times 1.5 trillion.

George Noble (2:54)

One is equal to 7 billion, one is equal to 7 trillion.

Tom Gober (2:56)

But that's all 700 I got comment, I got it, I got it. Now look, even if we knock it down to just the top 40, instead of 704, we're still at 1.3 plus. Whoa, whoa, whoa, whoa, whoa, whoa, whoa.

George Noble (3:11)

So you have 40 companies with 85% of the total.

SPEAKER_3 (3:17)

Yep.

George Noble (3:19)

Nothing to see here, vulture.

SPEAKER_3 (3:21)

Nothing to see here.

George Noble (3:21)

Keep going.

Tom Gober (3:22)

So I'm pointing this out because you can see there are some companies that are far more active and aggressive in affiliated investments and affiliated reinsurance.

SPEAKER_3 (3:36)

We're going to look at which one is this.

Tom Gober (3:42)

So what I did here, I took the latest statutory annual statements and I sorted by carrier based on total affiliated reinsurance.

SPEAKER_3 (3:54)

That's what we're talking about.

This is just the first 20 We were looking at 40 total to 1.3 trillion.

Tom Gober (4:02)

Notice, a theme annuity in Iowa is out there way beyond anywhere else.

SPEAKER_3 (4:11)

235.7 billion, right?

Tom Gober (4:13)

And they only have surplus of 4 billion. And then it drops off pretty quickly. But then look, you've got a lot of companies, and these are mangs you know, Betrapolitan, Long.

George Noble (4:25)

Oh, wait, wait, wait, wait, hey, hey. I know there's not a typo here, but I almost think there was.

Stay with the theme at the top.

SPEAKER_3 (4:31)

He said 2.4 billion in surpluses.

Tom Gober (4:33)

He was wondering, 35 billion, he only had 4 billion in surplus. What? Yep.

George Noble (4:38)

It's 100X.

Tom Gober (4:39)

But here's what's troubling about that. All of it is going to one reinsurer. The idea is to spread that stuff. That's the whole idea behind the law of large numbers. They're not only putting it all in one reinsurer.

It's in a black box. It's offshore, so it doesn't file statutory in the US, but it is an affiliate.

SPEAKER_3 (5:04)

It's one pocket to another.

George Noble (5:06)

It's like, trust me, bro, I got this.

Tom Gober (5:09)

I want to point out that Iowa is pretty prominent here. Iowa has more of the affiliated reinsurance in its state than any of the other states.