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

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

Global insurance coverage and reinsurance giant Allianz has actually freed up roughly $4.1 billion in value after entering into a reinsurance arrangement to move $35 billion of fixed index annuity liabilities to entities of Sixth Street and Clive Cowderys Resolution Life.Its among the biggest tradition 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 method to put capital to work in securing considerable liabilities to manage.
Allianz Life exposed a reinsurance arrangement 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 entrepreneur Clive Cowderys Resolution Group, to cover a $35-billion fixed index annuity portfolio.
Allianz described that the deal will “unlock worth in its life insurance coverage business by managing capital on its balance sheet more effectively and increasing synergies with its possession management business.”
Allianz also stated that, “The transaction illustrates the capability of Sixth Streets insurance platform, that includes Talcott Resolution, and Resolution Res insurance group, Resolution Life, to create and perform extremely versatile capital services for leading insurance coverage companies 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 must improve by around 6 percentage-points to approximately 18% and at a group level, Allianzs Solvency II ratio is anticipated to enhance by about 9 percentage-points to 216%.
Its the biggest life back book deal Allianz has gotten in into and the company stated it, “is in line with the groups broadened strategy to utilize collaborations with strong reinsurance and threat management business to monetize the worth of in-force organization and enhance the defense afforded to consumers.”
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 property management arm PIMCO and Allianz Global Investors will likewise remain on as the primary property managers of the reinsured business.
The liabilities are transferred efficiently through this deal, with two substantial investors and experts in the life space now set to benefit from this plan.
Sixth Street is a big asset supervisor and acquired Talcott Resolution, a specialist at offering in-force and brand-new organization services focused on capital versatility and danger management efficiencies to the insurance and reinsurance industry.
Once this Allianz deal 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 professional legacy life focused investment vehicle and supervisor and part of Clive Cowderys Resolution Group.
Resolution Life handles big books of life insurance coverage company, utilizing acquisitions or reinsurance backed by capital structures supported by institutional financiers, channelling earnings 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 gathered $90 billion in properties 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, 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 handling 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, talked about this new plan, “This reinsurance contract even more shows Resolution Lifes ability to complete large, innovative, and intricate transactions along with constructive partners. Resolution Lifes focus has actually constantly been to offer stability and security for policyholders while helping international insurance partners with their restructuring plans.”
This brand-new deal 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 substantially thanks to the additional firepower from its institutional financier base.
Which is why we discover these legacy life deals fascinating, 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 appear securitization could supply an alternative solution to some of these arrangements. It is a form of insurance-linked investment in the eyes of the institutional backers.
Allianz also held its investor day today and revealed a restored focus on enhancing capital performance and reducing volatility, by minimizing the long-tail risks in its portfolio, which naturally this deal becomes part of.
This is likely to be a trend for some of the larger global gamers, that find the weight of back books dragging on their capital and have a lot to get by releasing some of that with the assistance of reinsurance, suggesting a possibly growing function for capital market investors to finance tradition arrangements and possibly more chance for the ILS market.

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