Allianz enters reinsurance agreement with Resolution Life and affiliates of Sixth Street for its US fixed index annuity portfolio; transaction to unlock USD 4.1 billion in value

Allianz Life announced today that it is entering into a reinsurance agreement with affiliates of Sixth Street, including Talcott Resolution Life Insurance Company (“Talcott Resolution”), and Resolution Life, for a USD 35-billion fixed index annuity portfolio. The transaction is in line with the Allianz Group’s strategy to unlock value in its life insurance business by managing capital on its balance sheet more efficiently and increasing synergies with its asset management business.

The agreement creates value for all parties due to the market’s undervaluation of high-performing life insurance businesses. The transaction is intentionally structured to ensure continued commitment to high-quality service and support for Allianz Life’s US policyholders.

The agreement brings together strong institutions that offer valuable risk management, counterparty risk protections, capital flexibility, and potential for future growth.  

The transaction illustrates the ability of Sixth Street’s insurance platform, which includes Talcott Resolution, and Resolution Re’s insurance group, Resolution Life, to create and execute highly flexible capital solutions for leading insurance companies at scale.

The arrangement benefits from open-architecture asset management to ensure efficient and best-in-class investment management for policyholders across portfolio asset classes. 

The agreement will unlock USD 4.1 billion in value and free up regulatory capital for Allianz. Allianz Life’s return on equity is expected to improve by about 6 percentage-points to approximately 18% 1. On the group level, the transaction will improve Allianz’s Solvency II ratio by about 9 percentage-points to 216% 1.

The transaction, which is the biggest so far for Allianz in terms of size of life back books, is in line with the group’s expanded strategy to leverage partnerships with strong reinsurance and risk management companies to monetize the value of in-force business and enhance the protection afforded to customers.

Allianz Life will continue to manage administration of the policies in the portfolio and will remain responsible for fulfilling its obligations to policyholders. There will be no changes to policy servicing, call center management, claims payments, statement generation and delivery, distribution partner experience, and digital self-service. 

PIMCO and Allianz Global Investors will remain the primary asset managers of the reinsured business.

Reflecting Allianz’s integrated approach to creating value for shareholders, the reinsurance agreement is envisaged to accelerate growth in its life insurance and asset management businesses: Allianz Life, PIMCO and Allianz Global Investors.

In the life insurance business, the agreement will maximize Allianz Life’s competitive advantage as an asset gatherer, empowering it to pursue growth in core markets and expand through new product offerings, distribution channels, and customer pools. This positions Allianz Life to leverage current and emerging opportunities in the financial markets and offer customers innovative products that meet changing needs.

Allianz’s asset management business stands to benefit from the brand and reach of Allianz Life, with increased growth in assets under management and corresponding fee revenue.

On December 3, the Allianz Group will provide an update on its strategy for the 2022-2024 cycle and detail plans for its business segments.

Sixth Street is a leading global investment firm with over USD 55 billion in assets under management and committed capital. Sixth Street invests in and offers solutions to companies in the insurance and reinsurance industry through its USD 25 billion Sixth Street TAO platform as well as through its dedicated insurance affiliates, including Talcott Resolution. Upon the closing of this transaction, Talcott Resolution and its affiliates will manage USD 111 billion in liabilities and surplus on a pro-forma basis. 

Resolution Life is a global life insurance group focusing on the acquisition and management of portfolios of life insurance policies. It provides strong counterparty risk protections that are highly valued by Allianz. This transaction follows the agreement with Allianz Suisse Life to reinsure USD 4.3 billion of liabilities announced in September 2021 and demonstrates Resolution Life’s commitment to provide de-risking solutions to primary life insurers. Following this transaction, Resolution Life will have invested approximately USD 5 billion of equity and have approximately USD 90 billion in assets under management.

1 On a pro-forma basis for nine months 2021

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