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 giant Allianz has maximized roughly $4.1 billion in worth after getting in into 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 biggest tradition or back-book life and annuity reinsurance transactions ever seen and for Allianz its all about releasing capital and adding effectiveness, while for the counterparties it is a way to put capital to work in securing considerable liabilities to manage.
Allianz Life exposed a reinsurance agreement with affiliates of Sixth Street, including Talcott Resolution Life Insurance Company, and Resolution Life, the professional tradition life insurance coverage investments arm of insurance coverage entrepreneur Clive Cowderys Resolution Group, to cover a $35-billion fixed index annuity portfolio.
Allianz explained that the offer will “unlock worth in its life insurance service by handling capital on its balance sheet more effectively and increasing synergies with its possession management service.”
Allianz likewise said that, “The transaction illustrates the capability of Sixth Streets insurance coverage platform, that includes Talcott Resolution, and Resolution Res insurance group, Resolution Life, to develop and execute extremely flexible capital solutions for leading insurance provider at scale.”
The deal will open $4.1 billion in worth and complimentary up regulatory capital for Allianz, the re/insurer said, while Allianz Lifes return on equity must improve by around 6 percentage-points to around 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 entered into and the business said it, “remains in line with the groups broadened strategy to leverage collaborations with strong reinsurance and risk management companies to monetize the worth of in-force service and improve the protection paid for to consumers.”
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 huge possession management arm PIMCO and Allianz Global Investors will also stay on as the primary possession managers of the reinsured company.
The liabilities are moved efficiently through this offer, with 2 significant investors and specialists in the life space now set to benefit from this plan.
Sixth Street is a big property manager and obtained Talcott Resolution, a specialist at providing in-force and brand-new business services focused on capital versatility and risk management efficiencies to the insurance and reinsurance industry.
When this Allianz deal is closed, Talcott Resolution and its affiliates will manage $111 billion in liabilities and surplus on a pro-forma basis.
On The Other Hand, Resolution Life is the specialist legacy life focused investment automobile and supervisor and part of Clive Cowderys Resolution Group.
Resolution Life takes on large books of life insurance coverage service, using acquisitions or reinsurance backed by capital structures supported by institutional investors, funneling returns and profits back to them in the type of dividends.
After this deal, Resolution Life will have invested around $5 billion of equity and have gathered $90 billion in properties under management.
As we described previously 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, 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 worldwide on behalf of roughly 2.5 million insurance policy holders.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, commented on this new arrangement, “This reinsurance agreement further highlights Resolution Lifes capability to finish big, innovative, and intricate transactions together with useful partners. Resolution Lifes focus has actually constantly been to provide stability and security for policyholders while assisting global insurance partners with their restructuring strategies.”
So this brand-new offer and others Resolution Life has gotten in into through the second half of 2021, that include a transaction with Allianz Suisse Life to reinsure $4.3 billion of liabilities in September, Resolution has grown its platform significantly thanks to the additional firepower from its institutional investor base.
Which is why we discover these tradition life offers intriguing, as they feature capital markets backed capability being utilized for reinsurance of back books, with fund structures underpinning the financiers and arrangements typically paid via dividends.
Its not insurance-linked securities (ILS), although it does seem securitization might offer an alternative option to some of these plans. It is a kind of insurance-linked financial investment in the eyes of the institutional backers.
Allianz also held its financier day today and revealed a restored concentrate on improving capital effectiveness and reducing volatility, by decreasing the long-tail threats in its portfolio, which obviously this transaction becomes part of.
This is likely to be a trend for some of the larger international gamers, that discover the weight of back books dragging on their capital and have a lot to gain by releasing some of that with the help of reinsurance, suggesting a perhaps growing role for capital market financiers to finance tradition plans and perhaps more chance for the ILS market.

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