What You Need to Know
- Oliver Bäte sees opportunities in variable annuity sales.
- Talcott Resolution will provide about $20 billion in reinsurance and Resolution Life will provide about $14 billion.
- PIMCO and Allianz Global Investors will continue to be the primary asset managers for the reinsured annuities.
Allianz announced Friday that it has arranged to reinsure more than $34 billion in U.S. fixed annuities, and that it hopes to reduce the percentage of reserves supporting guaranteed savings and annuity products.
Executives from the Munich-based insurer talked about the moves at an event for investors. The event was streamed live on the web, and a recording is available here.
Oliver Bäte, the CEO of Allianz, told investors that the company has been happy with earnings at its Allianz Life Insurance Co, of North America unit but unhappy with the large amount of capital needed to support guarantees for non-variable indexed annuities.
“This is the business in Allianz that consumes most of the absolute amount of capital, more than any other, so we knew we had to do something,” Bäte said.
The Reinsurance Arrangement
Resolution Life plans to reinsure $26 billion in Allianz Life annuities and pass on responsibility for $12 billion of the annuities to Talcott Resolution Life Insurance Co., an affiliate of Sixth Street, through the retrocession agreement.
Talcott expects to end up reinsuring about $20 billion in Allianz Life fixed annuities, through a direct reinsurance arrangement and the Resolution Life retrocession agreement.
A reinsurer provides insurance for an insurer. A retrocessionaire provides insurance for a reinsurer.
Including the Allianz Life deal, Resolution Life will have about $90 billion in assets under management, and Talcott Resolution and affiliates will have about $111 billion in insurance and annuity liabilities and surplus under management, according to Allianz.