Allianz Suisse announced a reinsurance agreement this morning with Resolution Re covering a $4 billion block of run-off business.
The reinsurance transaction has been approved by the Swiss Financial Market Supervisory Authority (FINMA). The persistent low interest rate environment over the past few years prompted the deal, Allianz said in a news release.
The insurers also faces the wrath of Department of Justice investigators.
Under the agreement, Resolution Re will take over the market and insurance risks of a legacy portfolio of individual life insurance products from Allianz Suisse, within the framework of quota share reinsurance.
The transaction does not change anything for Allianz customers. Their contractual relationships remain unchanged, with Allianz Suisse remaining their contractual and contact partner for all questions related to life policies, the release said. Through Resolution Re, policyholders will receive additional coverage for their benefit claims against Allianz Suisse.
Monika Behr, head of Life Business at Allianz Suisse, considers the transaction to be a milestone for the company: “The reinsurance helps us significantly in our goal to remain a strong and reliable partner for our customers in the life business over the long term.”
Both parties have agreed not to disclose the terms of the transaction, which complies with all the regulatory requirements. The transaction "will further strengthen the competitiveness and capital position of Allianz Suisse by improving its risk-return ratio in a sustainable manner," the release said.
Stefan Rapp, the CFO of Allianz Suisse, says: “With this innovative solution, we are aiming to not only further strengthen our already solid capital position but also to reduce volatility in our solvency ratio. We want to create scope for further growth and to ensure that our life business is ready for the future despite the major challenges.”
Resolution Life previously acquired Voya Financial’s individual life in-force business as well as recently signing a reinsurance agreement with Lincoln National. Combined with the Group’s Bermuda reinsurance base, Resolution Life currently manages $60 billion of assets, employs over 1,500 people and provides services to approximately 2.5 million policyholders, the company said in its news release.
Earlier this year, Resolution Life completed a $1.6 billion equity capital raise and has "significant capital to deploy for future growth transactions," the release added.
Resolution Re’s CEO Steve Hales said:
“We are delighted to have signed this reinsurance agreement with Allianz Suisse, the largest European-to-Bermuda life legacy portfolio reinsurance transaction to date and a great example of our holistic approach to managing biometric and asset risks that demonstrates the strength of Resolution Re’s global reinsurance offering. I am proud to be part of the talented, diverse team that has made this happen and thank the Allianz Suisse team for their collaborative and “can-do” approach.”