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An arm of Global Atlantic Financial Group Ltd. has reinsured $5.7 billion in fixed and non-variable indexed annuities for Great American Life Insurance Company, the companies announced Monday.

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Great American is a subsidiary of American Financial Group of Cincinnati.

The deal involves $5.3 billion in ceded reserves associated with the indexed annuities and $700 million in ceded reserves associated with the traditional fixed annuities, according to American Financial.

American Financial said Great American is transferring $5.1 billion in bonds and $600 million in cash to Commonwealth Annuity and Life Insurance Company, the Global Atlantic subsidiary that’s providing the reinsurance.

The bonds in the portfolio being transferred have an average book yield of 3.13% and an average National Association of Insurance Commissioners rating of 1.4, according to American Financial.

The NAIC gives bonds risk designations from 1 through 6, with bonds in NAIC designation category 1 being classified as the safest bonds.

American Financial said that the deal involves only about 15% of Great American’s in-force business, and that Great American has retained $34 billion in annuity reserves.

The deal should free up $300 million to $325 million of statutory capital for Great American, and to create $375 million to $400 million in additional capital for American Financial, according to American Financial.

S. Craig Lindner, the co-chief executive officer of American Financial, said in a comment about that deal, which was included in the deal announcement, that the transaction will help American Financial “strengthen its already significant amount of excess capital.”

The deal should lead to higher core operating earnings and core operating returns both at the annuity business and at American Financial, Lindner said.

The reinsurance deal will have no impact on American Financial’s “relationship with, and commitments to, our annuity policyholders and distribution partners,” Lindner said.

American Financial will continue to issue fixed and non-variable indexed annuities, Lindner said.

“Global Atlantic has demonstrated strong capabilities partnering with us in the past, and they delivered a custom solution to meet our financial objectives,” Lindner said.

Global Atlantic came to life in 2004, and it said it has now reinsured about $40 billion in life and annuity assets.

A subsidiary of KKR & Co. agreed in July to acquire Global Atlantic. KKR and Global Atlantic said at the time that they expected the transaction to close in early 2021.

Global Atlantic mentioned the KKR deal briefly in the Great American reinsurance deal announcement and said the KKR deal is expected to close in early 2021, subject to getting the required regulatory approvals and meeting other customary closing conditions.

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