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 huge Allianz has maximized roughly $4.1 billion in worth after participating in 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 legacy or back-book life and annuity reinsurance deals ever seen and for Allianz its everything about freeing capital and including performance, while for the counterparties it is a method to put capital to operate in protecting significant liabilities to handle.
Allianz Life exposed a reinsurance arrangement with affiliates of Sixth Street, including Talcott Resolution Life Insurance Company, and Resolution Life, the expert legacy life insurance financial investments arm of insurance coverage entrepreneur Clive Cowderys Resolution Group, to cover a $35-billion fixed index annuity portfolio.
Allianz described that the offer will “unlock value in its life insurance coverage business by handling capital on its balance sheet more efficiently and increasing synergies with its possession management service.”
Allianz also said that, “The transaction highlights the ability of Sixth Streets insurance platform, that includes Talcott Resolution, and Resolution Res insurance coverage group, Resolution Life, to develop and carry out highly flexible capital solutions for leading insurance provider at scale.”
The offer will open $4.1 billion in value and maximize regulatory capital for Allianz, the re/insurer said, while Allianz Lifes return on equity should 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 deal Allianz has gotten in into and the business said it, “remains in line with the groups broadened strategy to leverage partnerships with strong reinsurance and risk management business to monetize the value of in-force organization and boost the protection afforded to customers.”
Allianz Life will continue to handle the policy administration for the portfolio, so with no modifications to how policyholders are serviced, while Allianzs huge property management arm PIMCO and Allianz Global Investors will also stay on as the primary asset supervisors of the reinsured service.
The liabilities are moved efficiently through this offer, with two significant financiers and professionals in the life area now set to benefit from this plan.
Sixth Street is a big asset supervisor and acquired Talcott Resolution, an expert at offering in-force and new company solutions concentrated on capital flexibility and danger management performances to the insurance and reinsurance industry.
When this Allianz offer is closed, Talcott Resolution and its affiliates will handle $111 billion in liabilities and surplus on a pro-forma basis.
Meanwhile, Resolution Life is the professional legacy life focused financial investment vehicle and manager and part of Clive Cowderys Resolution Group.
Resolution Life handles big books of life insurance coverage business, using acquisitions or reinsurance backed by capital structures supported by institutional investors, carrying 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 actually gathered $90 billion in assets under management.
As we discussed 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, 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 handling around $60 billion of properties worldwide on behalf of approximately 2.5 million insurance policy holders.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, commented on this brand-new arrangement, “This reinsurance contract even more highlights Resolution Lifes capability to finish large, innovative, and intricate deals together with useful partners. Resolution Lifes focus has always been to supply stability and security for policyholders while assisting global insurance partners with their restructuring strategies.”
This brand-new offer and others Resolution Life has actually gotten in into through the 2nd 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 investor base.
Which is why we discover these legacy life offers fascinating, as they include 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 appear securitization might provide an alternative option to a few of these plans. It is a form of insurance-linked investment in the eyes of the institutional backers.
Allianz also held its financier day today and announced a restored focus on improving capital performance and reducing volatility, by reducing the long-tail threats in its portfolio, which obviously this transaction becomes part of.
This is likely to be a trend for a few of the larger worldwide gamers, that discover the weight of back books dragging on their capital and have a lot to gain by releasing a few of that with the help of reinsurance, recommending a maybe growing function for capital market financiers to finance tradition arrangements and perhaps more opportunity for the ILS market too.

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