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

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

Global insurance and reinsurance huge Allianz has maximized roughly $4.1 billion in value after getting in into a reinsurance plan to transfer $35 billion of fixed index annuity liabilities to entities of Sixth Street and Clive Cowderys Resolution Life.Its one of the biggest legacy or back-book life and annuity reinsurance deals ever seen and for Allianz its all about freeing capital and including performance, while for the counterparties it is a way to put capital to work in protecting considerable liabilities to handle.
Allianz Life exposed a reinsurance agreement with affiliates of Sixth Street, including Talcott Resolution Life Insurance Company, and Resolution Life, the specialist legacy life insurance coverage financial investments arm of insurance coverage entrepreneur Clive Cowderys Resolution Group, to cover a $35-billion fixed index annuity portfolio.
Allianz discussed that the offer will “unlock value in its life insurance coverage service by managing capital on its balance sheet more effectively and increasing synergies with its asset management business.”
Allianz also stated that, “The transaction illustrates the capability of Sixth Streets insurance platform, which consists of Talcott Resolution, and Resolution Res insurance coverage group, Resolution Life, to create and carry out extremely flexible capital options for leading insurance companies at scale.”
The offer will open $4.1 billion in worth and maximize regulative capital for Allianz, the re/insurer stated, while Allianz Lifes return on equity should enhance by around 6 percentage-points to roughly 18% and at a group level, Allianzs Solvency II ratio is expected to improve by about 9 percentage-points to 216%.
Its the biggest life back book deal Allianz has actually participated in and the business said it, “is in line with the groups broadened method to take advantage of partnerships with strong reinsurance and threat management companies to generate income from the worth of in-force organization and enhance the protection paid for to consumers.”
Allianz Life will continue to handle the policy administration for the portfolio, so without any changes to how policyholders are serviced, while Allianzs giant property management arm PIMCO and Allianz Global Investors will also remain on as the primary property managers of the reinsured service.
But the liabilities are moved efficiently through this deal, with two considerable investors and specialists in the life space now set to take advantage of this plan.
Sixth Street is a large property manager and got Talcott Resolution, a specialist at providing in-force and brand-new business services focused on capital versatility and threat management efficiencies to the insurance and reinsurance industry.
Once this Allianz offer is closed, Talcott Resolution and its affiliates will handle $111 billion in liabilities and surplus on a pro-forma basis.
On The Other Hand, Resolution Life is the specialist legacy life focused investment vehicle and supervisor and part of Clive Cowderys Resolution Group.
Resolution Life takes on large books of life insurance coverage business, utilizing acquisitions or reinsurance backed by capital structures supported by institutional investors, funneling returns and profits back to them in the kind of dividends.
After this deal, Resolution Life will have invested around $5 billion of equity and have gathered $90 billion in assets under management.
As we explained previously this year, Resolution Life raised $1.6 billion to fund growth through the acquisition and reinsurance of life insurance coverage portfolios, utilizing its Bermudian reinsurance platform Resolution Re, in addition to 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 around 2.5 million policyholders.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, commented on this new plan, “This reinsurance contract further shows Resolution Lifes ability to finish large, innovative, and intricate deals alongside constructive partners. Resolution Lifes focus has constantly been to provide stability and security for policyholders while assisting international insurance coverage partners with their restructuring strategies.”
So this brand-new offer and others Resolution Life has actually participated in through the 2nd half of 2021, that include a deal with Allianz Suisse Life to reinsure $4.3 billion of liabilities in September, Resolution has actually grown its platform substantially thanks to the additional firepower from its institutional investor base.
Which is why we discover these legacy life deals intriguing, as they include capital markets backed capacity being utilized for reinsurance of back books, with fund structures underpinning the financiers and plans often paid by means of dividends.
Its not insurance-linked securities (ILS), although it does seem securitization might supply an alternative service to some of these plans. It is a kind of insurance-linked investment in the eyes of the institutional backers.
Allianz likewise held its financier day today and announced a restored concentrate on improving capital efficiency and decreasing volatility, by lowering the long-tail threats in its portfolio, which of course this deal is part of.
This is most likely to be a trend for some of the larger global players, that discover the weight of back books dragging out their capital and have a lot to get by releasing a few of that with the assistance of reinsurance, recommending a maybe growing function for capital market financiers to finance tradition arrangements and maybe more chance for the ILS market also.

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