Corebridge Financial is using a $51 billion reinsurance deal with Venerable to remodel its annuity operations.
The Houston-based life and annuity issuer said last week that Venerable will reinsure all of the individual retirement variable annuities written by its American General Life and U.S. Life Insurance Co. in the City of New York subsidiaries.
The arrangement includes annuities with $46 billion in separate account actuarial value, or value in the clients' own accounts, and $5 billion in actuarial value in the Corebridge subsidiaries' own general account holdings.
Venerable will also reinsure 100% of the value of the new individual variable annuities that American General writes now. Corebridge plans to stop writing individual variable annuities in New York state, which has different rules for life and annuity issuers than other jurisdictions use.
The effective date of the deal is March 31, 2025.
The Corebridge subsidiaries will continue to administer and service all of the contracts that are part of the Venerable transaction.
What it means: Corebridge may look better to investors on Wall Street.
If the company's stock price goes up, that could help the company raise capital more easily and more cheaply.
A higher stock price could also help Corebridge get more value out of its stock when it uses its stock to pay for acquiring other companies.
Reinsurance: Reinsurance is insurance for insurance companies.
A "direct writer" of insurance can use reinsurance to share risk with another entity.
A direct writer can also use reinsurance to reorganize its business, by putting another entity in charge of some aspects of administering a block of business; shifting some or all of the current block performance details into the financial reports of another entity; and, possibly, causing some block assets and operations to come under different tax laws or different insurance company capitalization standards.
Under U.S. rules, the direct writer is still responsible for making good on the benefits promises included in any life insurance policies or annuity contracts that are reinsured.
Corebridge: Corebridge is a company that holds the life and annuity business created by American International Group.
AIG began to make Corebridge a separate company in 2022.
Corebridge has about $400 billion in assets under management and administration.
Venerable: Venerable is a West Chester, Pennsylvania-based company that was started in 2018 by a group of companies that included Apollo Global Management, Athene and Reverence Capital Partners.
The Corebridge deal increased Venerable's assets under risk management to $118 billion, from $67 billion.
The future: The Venerable deal should make the earnings that Corebridge reports to investors under U.S. generally accepted accounting principles less volatile while helping the company continue to sell a full range of financial services products, including fixed, indexed and registered index-linked annuity products, Corebridge said.
Credit: New York Stock Exchange
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