Allianz frees capital with $35bn annuity reinsurance from Sixth Street & Resolution

Allianz frees capital with $35bn annuity reinsurance from Sixth Street & Resolution

Worldwide insurance coverage and reinsurance giant Allianz has actually maximized approximately $4.1 billion in worth after entering into a reinsurance plan to move $35 billion of set index annuity liabilities to entities of Sixth Street and Clive Cowderys Resolution Life.Its among the largest legacy or back-book life and annuity reinsurance deals ever seen and for Allianz its everything about freeing capital and adding efficiency, while for the counterparties it is a way to put capital to work in securing substantial liabilities to handle.
Allianz Life revealed a reinsurance arrangement with affiliates of Sixth Street, including Talcott Resolution Life Insurance Company, and Resolution Life, the professional legacy life insurance coverage financial investments arm of insurance entrepreneur Clive Cowderys Resolution Group, to cover a $35-billion fixed index annuity portfolio.
Allianz explained that the deal will “unlock value in its life insurance service by handling capital on its balance sheet more efficiently and increasing synergies with its possession management company.”
Allianz likewise stated that, “The deal shows the ability of Sixth Streets insurance platform, which includes Talcott Resolution, and Resolution Res insurance coverage group, Resolution Life, to produce and perform highly flexible capital services for leading insurance provider at scale.”
The deal will open $4.1 billion in value and maximize regulatory capital for Allianz, the re/insurer said, while Allianz Lifes return on equity ought to improve by around 6 percentage-points to approximately 18% and at a group level, Allianzs Solvency II ratio is anticipated to improve by about 9 percentage-points to 216%.
Its the largest life back book deal Allianz has participated in and the business stated it, “remains in line with the groups broadened method to utilize collaborations with strong reinsurance and danger management companies to monetize the value of in-force service and enhance the protection managed to clients.”
Allianz Life will continue to manage the policy administration for the portfolio, so with no changes to how insurance policy holders are serviced, while Allianzs huge possession management arm PIMCO and Allianz Global Investors will also remain on as the main asset managers of the reinsured service.
The liabilities are transferred effectively through this deal, with two significant investors and professionals in the life area now set to benefit from this plan.
Sixth Street is a big possession supervisor and acquired Talcott Resolution, a professional at supplying in-force and new company services focused on capital flexibility and danger management efficiencies to the insurance and reinsurance market.
When this Allianz offer is closed, Talcott Resolution and its affiliates will manage $111 billion in liabilities and surplus on a pro-forma basis.
Meanwhile, Resolution Life is the specialist tradition life focused investment car and manager and part of Clive Cowderys Resolution Group.
Resolution Life handles large books of life insurance coverage company, utilizing acquisitions or reinsurance backed by capital structures supported by institutional financiers, directing revenues and returns back to them in the type of dividends.
After this deal, Resolution Life will have invested approximately $5 billion of equity and have actually collected $90 billion in assets under management.
As we discussed earlier this year, Resolution Life raised $1.6 billion to money growth through the acquisition and reinsurance of life insurance portfolios, using its Bermudian reinsurance platform Resolution Re, as well as platforms in the United States and Australiasia.
At the time of that capital raise, which we covered in May 2021, Resolution Life was managing around $60 billion of possessions internationally on behalf of approximately 2.5 million insurance policy holders.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, discussed this new arrangement, “This reinsurance contract further illustrates Resolution Lifes ability to finish large, ingenious, and complex deals along with positive partners. Resolution Lifes focus has actually always been to offer stability and security for policyholders while helping worldwide insurance coverage partners with their restructuring strategies.”
So this new offer and others Resolution Life has actually entered into through the second half of 2021, which include a transaction with Allianz Suisse Life to reinsure $4.3 billion of liabilities in September, Resolution has actually grown its platform significantly thanks to the extra firepower from its institutional financier base.
Which is why we discover these legacy life deals intriguing, as they include capital markets backed capacity being used for reinsurance of back books, with fund structures underpinning the investors and plans often paid by means of dividends.
Its not insurance-linked securities (ILS), although it does seem securitization could provide an alternative option to some of these plans. However it is a form of insurance-linked financial investment in the eyes of the institutional backers.
Allianz likewise held its financier day today and revealed a renewed concentrate on enhancing capital efficiency and lowering volatility, by reducing the long-tail threats in its portfolio, which of course this transaction belongs to.
This is most likely to be a trend for a few of the bigger global gamers, that discover the weight of back books dragging on their capital and have a lot to acquire by freeing a few of that with the help of reinsurance, recommending a perhaps growing role for capital market investors to fund legacy plans and perhaps more opportunity for the ILS market also.

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