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 giant Allianz has actually maximized approximately $4.1 billion in worth after participating in a reinsurance arrangement to transfer $35 billion of set index annuity liabilities to entities of Sixth Street and Clive Cowderys Resolution Life.Its among the largest tradition or back-book life and annuity reinsurance deals ever seen and for Allianz its everything about releasing capital and including performance, while for the counterparties it is a way to put capital to work in protecting substantial liabilities to manage.
Allianz Life exposed a reinsurance agreement with affiliates of Sixth Street, consisting of Talcott Resolution Life Insurance Company, and Resolution Life, the professional legacy life insurance financial investments arm of insurance coverage entrepreneur Clive Cowderys Resolution Group, to cover a $35-billion repaired index annuity portfolio.
Allianz described that the deal will “unlock value in its life insurance organization by handling capital on its balance sheet more effectively and increasing synergies with its property management company.”
Allianz also stated that, “The deal highlights the capability of Sixth Streets insurance platform, that includes Talcott Resolution, and Resolution Res insurance coverage group, Resolution Life, to produce and carry out 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 need to 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 offer Allianz has actually participated in and the company said it, “is in line with the groups expanded method to take advantage of partnerships with strong reinsurance and risk management companies to generate income from the value of in-force business and improve the defense afforded to clients.”
Allianz Life will continue to handle the policy administration for the portfolio, so with no changes to how insurance policy holders are serviced, while Allianzs huge property management arm PIMCO and Allianz Global Investors will also remain on as the main property supervisors of the reinsured business.
The liabilities are moved efficiently through this deal, with 2 significant financiers and professionals in the life space now set to benefit from this plan.
Sixth Street is a large property supervisor and got Talcott Resolution, a specialist at offering in-force and brand-new service solutions focused on capital flexibility and threat management performances to the insurance and reinsurance market.
When this Allianz offer is closed, Talcott Resolution and its affiliates will handle $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 takes on big books of life insurance organization, using acquisitions or reinsurance backed by capital structures supported by institutional financiers, channelling profits and returns back to them in the type of dividends.
After this deal, Resolution Life will have invested roughly $5 billion of equity and have gathered $90 billion in properties under management.
As we discussed previously this year, Resolution Life raised $1.6 billion to fund development through the acquisition and reinsurance of life insurance coverage portfolios, using 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 managing around $60 billion of assets globally on behalf of roughly 2.5 million policyholders.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, discussed this new arrangement, “This reinsurance contract even more highlights Resolution Lifes ability to finish large, ingenious, and intricate transactions along with useful partners. Resolution Lifes focus has always been to supply stability and security for insurance policy holders while helping international insurance partners with their restructuring strategies.”
This brand-new deal and others Resolution Life has actually gotten in into through the second half of 2021, which consist of a transaction with Allianz Suisse Life to reinsure $4.3 billion of liabilities in September, Resolution has grown its platform substantially thanks to the extra firepower from its institutional financier base.
Which is why we discover these legacy life offers fascinating, as they feature capital markets backed capacity being utilized for reinsurance of back books, with fund structures underpinning the plans and investors typically paid via dividends.
Its not insurance-linked securities (ILS), although it does appear securitization might offer an alternative service to some of these plans. It is a type of insurance-linked financial investment in the eyes of the institutional backers.
Allianz also held its financier day today and revealed a renewed focus on enhancing capital effectiveness and decreasing volatility, by lowering the long-tail risks in its portfolio, which naturally this deal belongs to.
This is likely to be a pattern for a few of the larger international players, that find the weight of back books dragging out their capital and have a lot to gain by releasing some of that with the help of reinsurance, recommending a possibly growing role for capital market financiers to fund legacy arrangements and perhaps more chance for the ILS market too.

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