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

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

International insurance and reinsurance huge Allianz has freed up approximately $4.1 billion in value after getting in 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 biggest legacy or back-book life and annuity reinsurance transactions ever seen and for Allianz its everything about releasing capital and adding efficiency, while for the counterparties it is a method to put capital to operate in protecting considerable liabilities to handle.
Allianz Life revealed a reinsurance agreement with affiliates of Sixth Street, consisting of Talcott Resolution Life Insurance Company, and Resolution Life, the expert tradition life insurance coverage financial investments arm of insurance coverage entrepreneur Clive Cowderys Resolution Group, to cover a $35-billion repaired index annuity portfolio.
Allianz explained that the deal will “unlock worth in its life insurance service by handling capital on its balance sheet more effectively and increasing synergies with its asset management service.”
Allianz also said that, “The deal highlights the capability of Sixth Streets insurance coverage platform, that includes Talcott Resolution, and Resolution Res insurance coverage group, Resolution Life, to create and carry out extremely versatile capital services for leading insurer at scale.”
The deal will unlock $4.1 billion in worth and maximize regulative capital for Allianz, the re/insurer said, while Allianz Lifes return on equity need to improve by around 6 percentage-points to roughly 18% and at a group level, Allianzs Solvency II ratio is anticipated to enhance by about 9 percentage-points to 216%.
Its the largest life back book offer Allianz has participated in and the company said it, “is in line with the groups expanded strategy to utilize collaborations with strong reinsurance and risk management companies to generate income from the value 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 changes to how insurance policy holders are serviced, while Allianzs giant property management arm PIMCO and Allianz Global Investors will also remain on as the main asset supervisors of the reinsured organization.
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 possession manager and got Talcott Resolution, a professional at providing in-force and new service solutions focused on capital flexibility and threat management efficiencies to the insurance and reinsurance market.
Once this Allianz deal is closed, Talcott Resolution and its affiliates will handle $111 billion in liabilities and surplus on a pro-forma basis.
Resolution Life is the professional legacy life focused investment vehicle and manager and part of Clive Cowderys Resolution Group.
Resolution Life handles large books of life insurance company, utilizing acquisitions or reinsurance backed by capital structures supported by institutional financiers, directing returns and earnings back to them in the type of dividends.
After this deal, Resolution Life will have invested around $5 billion of equity and have 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 coverage portfolios, utilizing 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 properties internationally on behalf of around 2.5 million insurance policy holders.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, discussed this new plan, “This reinsurance contract even more shows Resolution Lifes capability to finish large, ingenious, and complicated deals alongside constructive partners. Resolution Lifes focus has always been to supply stability and security for policyholders while assisting global insurance coverage partners with their restructuring strategies.”
This brand-new offer and others Resolution Life has actually entered into through the 2nd half of 2021, which consist of 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 investor base.
Which is why we find these legacy life offers intriguing, as they include capital markets backed capacity being used for reinsurance of back books, with fund structures underpinning the arrangements and investors often paid by means of dividends.
Its not insurance-linked securities (ILS), although it does seem securitization might offer an alternative option to a few of these plans. It is a kind of insurance-linked financial investment in the eyes of the institutional backers.
Allianz also held its investor day today and announced a restored focus on improving capital effectiveness and reducing volatility, by lowering the long-tail risks in its portfolio, which obviously this deal becomes part of.
This is likely to be a trend for some of the bigger global gamers, that find the weight of back books dragging on their capital and have a lot to get by freeing some of that with the aid of reinsurance, suggesting a maybe growing role for capital market financiers to fund tradition arrangements and perhaps more opportunity for the ILS market.

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