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

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

Worldwide insurance and reinsurance giant Allianz has actually freed 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 deals ever seen and for Allianz its all about releasing capital and adding performance, while for the counterparties it is a method to put capital to work in protecting significant liabilities to handle.
Allianz Life revealed a reinsurance arrangement with affiliates of Sixth Street, consisting of Talcott Resolution Life Insurance Company, and Resolution Life, the professional tradition life insurance coverage financial investments arm of insurance entrepreneur Clive Cowderys Resolution Group, to cover a $35-billion repaired index annuity portfolio.
Allianz described that the deal will “unlock worth in its life insurance coverage organization by managing capital on its balance sheet more effectively and increasing synergies with its possession management organization.”
Allianz likewise stated that, “The transaction shows the capability of Sixth Streets insurance coverage platform, that includes Talcott Resolution, and Resolution Res insurance group, Resolution Life, to create and perform highly flexible capital services for leading insurance provider at scale.”
The offer will unlock $4.1 billion in value and maximize regulatory capital for Allianz, the re/insurer stated, while Allianz Lifes return on equity need to improve by around 6 percentage-points to around 18% and at a group level, Allianzs Solvency II ratio is expected to enhance by about 9 percentage-points to 216%.
Its the biggest life back book offer Allianz has actually entered into and the business stated it, “is in line with the groups broadened method to take advantage of collaborations with strong reinsurance and threat management companies to generate income from the worth of in-force organization and improve the security paid for to customers.”
Allianz Life will continue to manage the policy administration for the portfolio, so without any changes to how policyholders are serviced, while Allianzs huge property management arm PIMCO and Allianz Global Investors will also remain on as the main possession managers of the reinsured organization.
The liabilities are transferred effectively through this deal, with two substantial financiers and experts in the life area now set to benefit from this plan.
Sixth Street is a large possession manager and obtained Talcott Resolution, an expert at offering in-force and brand-new company solutions focused on capital flexibility and danger management effectiveness to the insurance coverage and reinsurance market.
As soon as this Allianz deal is closed, Talcott Resolution and its affiliates will manage $111 billion in liabilities and surplus on a pro-forma basis.
Resolution Life is the expert legacy life focused financial investment vehicle and manager and part of Clive Cowderys Resolution Group.
Resolution Life takes on large books of life insurance business, utilizing acquisitions or reinsurance backed by capital structures supported by institutional investors, directing returns and revenues back to them in the form of dividends.
After this deal, Resolution Life will have invested around $5 billion of equity and have gathered $90 billion in assets under management.
As we explained earlier this year, Resolution Life raised $1.6 billion to money development through the acquisition and reinsurance of life insurance coverage portfolios, utilizing 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 possessions internationally on behalf of approximately 2.5 million insurance policy holders.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, talked about this brand-new arrangement, “This reinsurance arrangement further shows Resolution Lifes capability to finish big, ingenious, and complicated deals alongside constructive partners. Resolution Lifes focus has actually always been to provide stability and security for policyholders while helping global insurance coverage partners with their restructuring strategies.”
This brand-new offer and others Resolution Life has entered into through the 2nd half of 2021, which include a deal 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 legacy life offers interesting, as they include capital markets backed capability being used for reinsurance of back books, with fund structures underpinning the investors and arrangements often paid by means of dividends.
Its not insurance-linked securities (ILS), although it does seem securitization could offer an alternative solution to a few of these arrangements. But it is a kind of insurance-linked financial investment in the eyes of the institutional backers.
Allianz likewise held its financier day today and announced a restored concentrate on enhancing capital effectiveness and reducing volatility, by lowering the long-tail risks in its portfolio, which naturally this deal becomes part of.
This is likely to be a pattern for some of the bigger global players, that find the weight of back books dragging on their capital and have a lot to gain by releasing some of that with the assistance of reinsurance, suggesting a maybe growing role for capital market financiers to finance legacy plans and perhaps more opportunity for the ILS market.

Leave a Reply

Your email address will not be published.

error: Content is protected !!