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MetLife, Prudential Close $29.2B in Life and Annuity Reinsurance Deals

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What You Need to Know

  • Global Atlantic is reinsuring old retail life and annuity business for MetLife.
  • Constellation is reinsuring traditional variable annuities for Prudential.
  • The MetLife deal will free more than $3.2 billion in cash, and the Prudential deal will free about $650 million.

MetLife and Prudential Financial have announced reinsurance deals involving a total of $29.2 billion in life insurance and annuity account value.

MetLife picked Global Atlantic, an affiliate of KKR, to reinsurance a block of $14 billion in life insurance policies and a block of $5.2 billion in fixed annuities.

Prudential Financial has arranged for Constellation Insurance Holdings to reinsure a block of older variable annuities with $10 billion in account value.

Constellation is a Cincinnati-based company controlled by two Canadian pension plan investment managers, Caisse de Dépôt et Placement du Québec and the Ontario Teachers’ Pension Plan Board.

What It Means

MetLife and Prudential said their reinsurance deals won´t have any noticeable effect on  customers because they’ll continue to service the policies and annuity contracts.

But the deals should be good for the insurers and their shareholders.

MetLife expects its deal with KKR to provide more than $3.2 billion in cash, through ceding commissions and release of excess capital.

Prudential expects to receive $650 million in ceding commissions and capital release from the Constellation deal.


Reinsurance is insurance for insurance companies.

The original “direct writers” of products may make reinsurance deals for protection against catastrophic risk, such as the risks associated with major hurricanes, large earthquakes or severe influenza pandemics.

In other cases, direct writers may use reinsurance deals to dispose of unwanted blocks of business, to share risk with outside investors, or to put business in the hands of a company that operates under different accounting, tax or insurance rules.

The direct writer keeps ultimate responsibility for paying the benefits associated with the blocks of business involved with reinsurance arrangements.

The MetLife Deal

The MetLife deal with Global Atlantic covers a mix of universal life policies, variable universal life policies, fixed annuities and universal life policies with secondary guarantees.

The policies and contracts are in blocks of business that MetLife’s retail business wrote before the company made the retail business a separate company, Brighthouse Financial.

“As part of MetLife’s ongoing commitment to its policyholders, the company will continue to be responsible for all customer-related functions,” the company said.

The deal agreement calls for MetLife Investment Management to continue to manage some of the assets associated with the blocks for five years.

The Prudential Deal

Prudential said the deal with Constellation covers Prudential Defined Income annuities issued by its Pruco Life Insurance Co. subsidiary.

The arrangement will affect about 10% of the account value in its older, traditional variable annuities.

Prudential is now focusing on the sale of fixed annuities and FlexGuard-registered index-linked annuities.

The agreement with Constellation “will not result in any change of contract ownership, terms, fees or commission schedules for contracts included in the transaction,” Prudential said. “Prudential will continue to service the block and maintain its existing relationships with contract holders, broker-dealers and financial professionals.”

Prudential expects to close the deal by June 30.

Pictured: MetLife and Prudential’s headquarters. (Image: Bloomberg)