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 huge Allianz has released up approximately $4.1 billion in value after participating in a reinsurance plan 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 transactions ever seen and for Allianz its all about releasing capital and including effectiveness, while for the counterparties it is a way to put capital to operate in securing substantial liabilities to handle.
Allianz Life exposed a reinsurance agreement with affiliates of Sixth Street, including Talcott Resolution Life Insurance Company, and Resolution Life, the professional legacy life insurance investments arm of insurance entrepreneur Clive Cowderys Resolution Group, to cover a $35-billion fixed index annuity portfolio.
Allianz explained that the offer will “unlock value in its life insurance coverage service by handling capital on its balance sheet more efficiently and increasing synergies with its asset management service.”
Allianz likewise said that, “The transaction highlights the ability of Sixth Streets insurance platform, that includes Talcott Resolution, and Resolution Res insurance group, Resolution Life, to produce and carry out extremely versatile capital options for leading insurance business 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 must enhance by around 6 percentage-points to approximately 18% and at a group level, Allianzs Solvency II ratio is anticipated to improve by about 9 percentage-points to 216%.
Its the biggest life back book offer Allianz has participated in and the business said it, “is in line with the groups expanded strategy to leverage collaborations with strong reinsurance and risk management business to monetize the value of in-force company and enhance the defense managed to clients.”
Allianz Life will continue to manage the policy administration for the portfolio, so with no modifications to how policyholders are serviced, while Allianzs giant possession management arm PIMCO and Allianz Global Investors will also remain on as the primary asset supervisors of the reinsured organization.
But the liabilities are moved successfully through this deal, with 2 significant investors and professionals 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 offering in-force and new company options focused on capital flexibility and risk management performances to the insurance coverage and reinsurance industry.
Once this Allianz offer 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 financial investment vehicle and manager and part of Clive Cowderys Resolution Group.
Resolution Life takes on big books of life insurance company, using acquisitions or reinsurance backed by capital structures supported by institutional financiers, transporting revenues and returns back to them in the form of dividends.
After this deal, Resolution Life will have invested approximately $5 billion of equity and have gathered $90 billion in possessions under management.
As we described earlier this year, Resolution Life raised $1.6 billion to fund growth through the acquisition and reinsurance of life insurance coverage portfolios, using its Bermudian reinsurance platform Resolution Re, as well as 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 possessions internationally on behalf of around 2.5 million insurance policy holders.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, commented on this new plan, “This reinsurance arrangement even more illustrates Resolution Lifes ability to complete large, innovative, and complicated transactions together with positive partners. Resolution Lifes focus has always been to supply stability and security for insurance policy holders while assisting worldwide insurance partners with their restructuring strategies.”
This new offer 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 considerably thanks to the additional firepower from its institutional financier base.
Which is why we discover these tradition life deals fascinating, as they include 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 seem securitization could offer an alternative service to a few of these plans. It is a type of insurance-linked investment in the eyes of the institutional backers.
Allianz likewise held its investor day today and announced a renewed focus on improving capital effectiveness and lowering volatility, by decreasing the long-tail threats in its portfolio, which of course this deal is part of.
This is most likely to be a pattern for some of the bigger worldwide gamers, that discover 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, recommending a possibly growing function for capital market financiers to finance legacy arrangements and possibly more opportunity for the ILS market.

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