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

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

International 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 fixed index annuity liabilities to entities of Sixth Street and Clive Cowderys Resolution Life.Its one of the largest legacy or back-book life and annuity reinsurance deals ever seen and for Allianz its all about releasing capital and adding performance, while for the counterparties it is a method to put capital to work in protecting considerable liabilities to manage.
Allianz Life revealed a reinsurance agreement with affiliates of Sixth Street, including Talcott Resolution Life Insurance Company, and Resolution Life, the professional legacy life insurance financial investments arm of insurance entrepreneur Clive Cowderys Resolution Group, to cover a $35-billion repaired index annuity portfolio.
Allianz discussed that the offer will “unlock value in its life insurance coverage organization by managing capital on its balance sheet more effectively and increasing synergies with its possession management company.”
Allianz also said that, “The transaction highlights the capability of Sixth Streets insurance platform, which includes Talcott Resolution, and Resolution Res insurance coverage group, Resolution Life, to produce and execute extremely flexible capital solutions for leading insurer at scale.”
The offer will unlock $4.1 billion in value and maximize regulative capital for Allianz, the re/insurer stated, while Allianz Lifes return on equity should enhance by around 6 percentage-points to approximately 18% and at a group level, Allianzs Solvency II ratio is expected 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 expanded strategy to take advantage of collaborations with strong reinsurance and danger management business to generate income from the worth of in-force business and boost the protection managed to customers.”
Allianz Life will continue to manage the policy administration for the portfolio, so without any modifications to how insurance policy holders are serviced, while Allianzs giant asset management arm PIMCO and Allianz Global Investors will likewise remain on as the primary property supervisors of the reinsured business.
But the liabilities are transferred successfully through this deal, with 2 considerable investors and experts in the life space now set to take advantage of this arrangement.
Sixth Street is a big possession manager and got Talcott Resolution, a specialist at offering in-force and brand-new service services concentrated on capital flexibility and threat management effectiveness to the insurance coverage and reinsurance market.
As soon as this Allianz deal is closed, Talcott Resolution and its affiliates will manage $111 billion in liabilities and surplus on a pro-forma basis.
Resolution Life is the professional legacy life focused investment car and supervisor and part of Clive Cowderys Resolution Group.
Resolution Life takes on big books of life insurance coverage organization, using acquisitions or reinsurance backed by capital structures supported by institutional financiers, carrying returns and earnings back to them in the type of dividends.
After this transaction, Resolution Life will have invested approximately $5 billion of equity and have actually collected $90 billion in assets under management.
As we discussed previously this year, Resolution Life raised $1.6 billion to money development through the acquisition and reinsurance of life insurance portfolios, utilizing its Bermudian reinsurance platform Resolution Re, along with platforms in the US and Australiasia.
At the time of that capital raise, which we covered in May 2021, Resolution Life was handling around $60 billion of properties internationally on behalf of around 2.5 million insurance policy holders.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, talked about this brand-new plan, “This reinsurance agreement even more illustrates Resolution Lifes capability to complete large, innovative, and complicated deals along with constructive partners. Resolution Lifes focus has constantly been to provide stability and security for insurance policy holders while assisting worldwide insurance coverage partners with their restructuring plans.”
So this new deal and others Resolution Life has actually entered into through the second half of 2021, that 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 additional firepower from its institutional financier base.
Which is why we discover these tradition life offers intriguing, as they include capital markets backed capability being utilized for reinsurance of back books, with fund structures underpinning the plans and financiers frequently paid by means of dividends.
Its not insurance-linked securities (ILS), although it does seem securitization might offer an alternative option to some of these arrangements. However it is a form of insurance-linked financial investment in the eyes of the institutional backers.
Allianz also held its investor day today and revealed a renewed concentrate on enhancing capital performance and lowering volatility, by minimizing the long-tail threats in its portfolio, which obviously this transaction belongs to.
This is likely to be a pattern for some of the bigger international gamers, that discover the weight of back books dragging on their capital and have a lot to gain by releasing some of that with the assistance of reinsurance, suggesting a maybe growing role for capital market financiers to finance legacy plans and maybe more opportunity for the ILS market.

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