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 released up approximately $4.1 billion in worth after participating in a reinsurance arrangement 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 transactions ever seen and for Allianz its everything about releasing capital and adding performance, while for the counterparties it is a method to put capital to operate in protecting considerable liabilities to handle.
Allianz Life revealed a reinsurance contract with affiliates of Sixth Street, consisting of Talcott Resolution Life Insurance Company, and Resolution Life, the professional tradition life insurance coverage investments arm of insurance business owner Clive Cowderys Resolution Group, to cover a $35-billion fixed index annuity portfolio.
Allianz explained that the deal will “unlock worth in its life insurance coverage organization by handling capital on its balance sheet more efficiently and increasing synergies with its possession management service.”
Allianz likewise said that, “The deal shows the capability of Sixth Streets insurance platform, which includes Talcott Resolution, and Resolution Res insurance group, Resolution Life, to create and perform highly flexible capital options for leading insurer at scale.”
The offer will open $4.1 billion in worth and free up regulatory capital for Allianz, the re/insurer stated, 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 expected to improve by about 9 percentage-points to 216%.
Its the biggest life back book offer Allianz has actually participated in and the business said it, “remains in line with the groups expanded strategy to take advantage of collaborations with strong reinsurance and risk management business to generate income from the worth of in-force service and improve the security managed to consumers.”
Allianz Life will continue to manage the policy administration for the portfolio, so without any modifications to how policyholders are serviced, while Allianzs giant asset management arm PIMCO and Allianz Global Investors will also stay on as the primary property supervisors of the reinsured organization.
The liabilities are moved effectively through this offer, with two considerable investors and specialists in the life space now set to benefit from this arrangement.
Sixth Street is a large possession manager and got Talcott Resolution, a professional at providing in-force and new organization services concentrated on capital flexibility and threat management performances to the insurance and reinsurance market.
As soon as 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 tradition life focused financial investment car 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 form of dividends.
After this transaction, Resolution Life will have invested approximately $5 billion of equity and have collected $90 billion in assets under management.
As we explained earlier this year, Resolution Life raised $1.6 billion to money growth through the acquisition and reinsurance of life insurance coverage portfolios, using its Bermudian reinsurance platform Resolution Re, in addition to 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 assets internationally on behalf of approximately 2.5 million policyholders.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, talked about this brand-new arrangement, “This reinsurance contract even more shows Resolution Lifes ability to finish large, innovative, and complicated transactions together with constructive partners. Resolution Lifes focus has actually constantly been to offer stability and security for insurance policy holders while helping worldwide insurance partners with their restructuring plans.”
This new deal and others Resolution Life has gotten in 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 grown its platform substantially thanks to the additional firepower from its institutional financier base.
Which is why we discover these legacy life offers interesting, as they include capital markets backed capability being utilized for reinsurance of back books, with fund structures underpinning the financiers and plans frequently paid via dividends.
Its not insurance-linked securities (ILS), although it does seem securitization might supply an alternative service to a few of these plans. But 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 enhancing capital performance and lowering volatility, by lowering the long-tail threats in its portfolio, which obviously this transaction becomes part of.
This is likely to be a pattern for some of the bigger international players, that find the weight of back books dragging on their capital and have a lot to acquire by releasing some of that with the aid of reinsurance, suggesting a perhaps growing role for capital market financiers to fund tradition arrangements and possibly more opportunity for the ILS market.

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