Prudential Financial Inc. and Warburg Pincus are among the investors contributing a combined $1 billion in equity to create a Bermuda-based reinsurer, Prismic Life Reinsurance Ltd.
In its first deal, Prismic acquired $10 billion in structured settlement annuity contracts from Prudential, freeing up capital for it to write new insurance business. The transaction is subject to regulatory approvals.
Initially, Prudential will own 20% of the new company, with Warburg controlling a 15% stake, according to an emailed statement. Nomura Holdings Inc. said it is one of the global investors that owns the remaining equity.
The formation of Prismic allows Prudential to unload assets with longer durations that are undervalued in the public markets, such as variable annuities and guaranteed universal life insurance policies, Prudential Vice Chair Rob Falzon said in an interview.
Prudential sees opportunities to manage assets for other insurers and to develop its business in providing flow reinsurance, including pension-risk transfer deals, and third-party insurance, said Falzon. The pension-risk transfer market in the US grew to about $50 billion in deals last year as companies sought to offload their defined benefit pension obligations.
“I’m not sure anyone else has the kind of scale and brand that we bring,” said Falzon, whose firm had about $1.4 trillion in assets under management as of mid-year.
CEO of Prismic
Amy Kessler, the founding leader of Prudential’s international reinsurance business, will become Prismic’s chief executive officer, according to the statement.
Prudential’s investment arm, PGIM, will manage traditional assets such as fixed income for Prismic, as well as private credit and real estate, while Warburg will manage the reinsurer’s investments in private equity and others. more unstable assets.
Warburg has long invested in the insurance industry through its private equity funds, including Bermuda reinsurers RenaissanceRe Holdings Ltd. and Arch Capital Group Ltd.
“Warburg Pincus and Prudential believe this business has significant growth and intend to grow this business materially,” said Dan Zilberman, head of capital solutions and co-head of financial services at Warburg. , said in an interview.
Deutsche Bank AG advised Prudential on the transaction.
Photo: A logo is displayed at Prudential Financial Inc. Tower in Newark, NJ, on Thursday, January 25, 2018. Photo credit: Victor J. Blue/Bloomberg
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