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Allianz Life, part of the global insurer and reinsurer, has announced a new reinsurance agreement with affiliates of Sixth Street, including Talcott Resolution Life Insurance Company, and Resolution Life, for a $35 billion fixed index annuity portfolio.

new-allianz-logoThe arrangement is in line with the firm’s strategy to unlock value in its life insurance business by managing capital on its balance sheet more efficiently.

In fact, Allianz says that the transaction will unlock $4.1 billion in value and free up regulatory capital. It’s also expected to improve the Life division’s return on equity by around 6% to 18%.

This deal is the largest so far for Allianz in terms of size of life back books, and is line with the group’s strategy to enter partnerships with “strong reinsurance and risk management companies to monetize the value of in-force business and enhance the protection afforded to customers.”

Under the arrangement, Allianz Life will continue to manage administration of the policies in the portfolio and will remain responsible for fulfilling its obligations to policyholders.

Additionally, there will be no changes to policy servicing, call center management, claims payments, statement generation and delivery, distribution partner experience, and digital self-service.

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

Allianz states that this transaction creates value for all parties due to the market’s undervaluation of high-performing life insurance businesses. Furthermore, this transaction is internationally structured in order to ensure continued commitment to high-quality service and support for Allianz Life’s U.S. policyholders.

Discussing its strategy in action, Allianz notes that, “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.”

For Sixth Street, a global investment firm with more than $55 billion in assets under management and committed capital, the transaction demonstrates the ability of its insurance platform to create and execute highly flexible capital solutions for leading insurers at scale.

By admin

 

Google and its holding company parent Alphabet, Inc. have now successfully secured $275.5 million of California earthquake risk protection from their new catastrophe bond, the Phoenician Re Ltd. (Series 2021-1) issuance.

google-logoIt’s fallen a little short of the revised top-end target of $285 million, but with pricing at a much lower multiple than Google’s previous catastrophe bond issues.

Google’s parent company Alphabet came back to the catastrophe bond market around mid-November 2021, with the tech giant looking to add another $250 million or more in California earthquake risk protection to its insurance arrangements, through the tapping of insurance-linked securities (ILS) investors.

This is the third Phoenician Re series of notes to be issued for the benefit of Google and Alphabet.

First was the Phoenician Re Ltd. (Series 2020-1)  transaction in early December 2020, which secured the tech firm $237.5 million of California earthquake insurance protection.

That was quickly followed up by the second Google catastrophe bond, a $95 million Phoenician Re Ltd. (Series 2020-2) transaction that expanded the same insurance coverage layer for the tech giant.

Encouragingly, Google continues to look to build out the capital market and ILS fund participation in its insurance tower that the tech company receives thanks to its catastrophe bonds, with this latest deal set to wrap around and sit alongside the previously issued series of cat bond notes.

Phoenician Re Ltd., Google’s Bermuda-based special purpose insurer, originally targeted an issuance of $250 million or more Series 2021-1  tranche of notes.

As we then explained, the target size was lifted, with as much as $285 million of coverage sought from the catastrophe bond from Google.

The upsizing was successful, with the single tranche cat bond now fixed at $275.5 million, but the top-end target was not achieved, suggesting there were limits to investor appetite at the desired pricing.

So now, $275.5 million of Phoenician Re 2021-1 notes will be sold to collateralize reinsurance agreements that will ultimately cascade down to provide California earthquake insurance coverage to Alphabet and its Google entities.

Global reinsurance company Hannover Re is again fronting and transforming the earthquake risk for the tech giant, entering into retrocessional agreements with the SPI Phoenician Re, then into reinsurance agreements with Alphabet’s Hawaii domiciled captive insurer Imi Assurance, which in turn will provide the insurance protection to Alphabet.

The $275.5 million Phoenician Re Ltd. cat bond will provide Alphabet and its Google operations with a three year source of California earthquake insurance protection, on a per-occurrence basis and using an indemnity trigger.

The now $275.5 million of Series 2021-1 Class A notes that Phoenician Re will issue have an initial expected loss of 0.51% and were first offered to cat bond investors with price guidance in a range from 2.25% to 2.75%. That pricing tightened to the mid-point, at 2.5%, which is where the cat bond is now going to settle, we understand.

It’s offering investors a relatively high multiple-at-market, of just under 5 times the expected loss.

But, it’s a much lower multiple than the previous two Google catastrophe bonds, although still commensurate with how other California quake issues have priced from the likes of the CEA.

The 2020-1 cat bond priced at 3% for an expected loss (EL) of 0.33%, so a multiple of 9 times the EL, while the 2020-2 cat bond priced at 2.9% for an initial expected loss of 0.247%, so a multiple of 11.7 times the EL.

So this is quite a result for Google, with a higher risk cat bond, on an expected loss basis, pricing below the coupon on its previous two, lower-risk deals from only a year ago.

Which definitely reflects a softening of cat bond pricing over 2021, but also likely reflects the fact Google’s insurance tower is now increasingly familiar to catastrophe bond funds and investors, resulting in improved execution for the company.

You can read all about Google’s new catastrophe bond, the Phoenician Re Ltd. (Series 2021-1) transaction, alongside every other cat bond deal ever issued in the Artemis Deal Directory.

By admin

 

The Minister for Finance has inaugurated the newly constituted board of directors of the insurance regulator, National Insurance Commission (NIC).

Speaking at an inauguration ceremony in Accra on 30 November 2021, the minister Mr Ken Ofori-Atta charged members of the board to diligently steer the affairs of the insurance industry and make it more efficient. He said there was a huge untapped market in the informal sector and the board must initiate strategies for the industry to harness the market and help deepen insurance penetration in the country.

Referring to the ongoing recapitalisation exercise in the insurance sector, he urged insurance entities to meet the new minimum capital requirements.

The new seven-member board is chaired by Ms Abenaa Kessewaa Brown with Dr Justice Yaw Ofori as Commissioner of Insurance.

Meanwhile, data from the Bank of Ghana (BoG) show that Ghana’s insurance industry witnessed an increase in its total capital base to GHS2.91bn ($472m) at the end of December 2020, from GHS2.53bn at the end of December 2019. The BoG’s Financial Stability Review for 2020 said the insurance industry last year grew by 15% over the previous year.

The NIC was established by the new Insurance Act, 2021 (Act 1061). Its object is to ensure effective administration, supervision, regulation, monitoring, and control of the business of insurance, to protect insurance policyholders and the insurance industry. The NIC, among other things, is committed to ensuring that insurance companies operating in the Ghanaian market are financially sound and honour their obligations to policyholders.

The new Insurance Act 2021, assented to by Ghana’s President on 5 January 2021, replaces the previous Insurance Act of 2006 (Act 724) to bring the regulation of the insurance industry into conformity with the international framework and supervisory standards.

The new Act aims at strengthening corporate governance, deepening the insurance penetration, and increasing access to insurance for the population. It affirms the position of the NIC as the regulator of insurance business and practice in Ghana.