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RGA Reinsures $2.9 Billion Horace Mann Annuity Block

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RGA's headquarters in Chesterfield, Missouri (Photo: RGA) RGA’s headquarters in Chesterfield, Missouri (Photo: RGA)

An arm of Reinsurance Group of America Inc. (RGA) has reinsured a $2.9 billion block of annuities for Horace Mann Life Insurance Company, a subsidiary of Horace Mann Educators Corp., RGA and Horace Mann announced today.

The deal will free up about $185 million in capital at Horace Mann Life.

Horace Mann Life’s parent plans to use the cash to finance part of the $405 million cost of acquiring National Teachers Associates Life Insurance Company of Dallas, Horace Mann said. National Teachers is best known as an issuer of cancer insurance and other supplemental health insurance products.

Horace Mann said it will continue to service and administer the annuities that RGA is reinsuring.

The Block

RGA is reinsuring an older block of 54,000 individual annuities.

All of the contracts were written in 2002 or earlier, and they have a minimum guaranteed crediting rate of 4.5%.

The block includes about $2.2 billion in fixed annuities and $700 million in variable annuities.

The Companies

RGA is a reinsurer based in Chesterfield, Missouri, and Horace Mann is an insurer based in Springfield, Illinois.

Horace Mann still has $4.8 billion in assets under management, including about $2.1 billion in fixed annuities, with an average deferred crediting rate of 2.5%.

Horace Mann also has $500 million in indexed annuities and $2.2 billion in variable annuities.

The variable annuity total still includes the $700 million in variable annuities reinsured by RGA, because RGA reinsured those variable annuities on a modified coinsurance basis, Horace Mann said.

Horace Mann’s Cash

Horace Mann said it has also replaced its old revolving line of credit with a similar, five-year, $225 million line of credit.

The company said it will use  the line of credit, the cash from the reinsurance deal, and about $85 million in excess capital at National Teachers Associates to pay for the National Teachers Associates deal.

— Read Horace Mann Agrees to Acquire National Teachers Associateson ThinkAdvisor.

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