Reinsurance Group of America (RGA) has entered into an agreement with Equitable Holdings to reinsure a block of life insurance products, strengthening their strategic partnership.
Under the agreement, RGA will reinsure US$32 billion of life insurance liabilities, including US$18 billion in general account reserves and US$14 billion in separate account reserves.
The company expects to deploy US$1.5 billion in capital at closing to support the transaction. The deal is structured to align with RGA’s risk profile and is expected to contribute to adjusted operating earnings per share.
RGA expects the transaction to generate approximately US$70 million in adjusted operating income before taxes in 2025, assuming a mid-year closing. This figure is projected to grow to US$160 million to US$170 million in 2026 and eventually reach approximately US$200 million annually.
RGA said that it intends to finance the transaction through excess capital and, depending on market conditions, potential debt financing. Equitable, on the other hand, will retain policyholder administration and support responsibilities.
The transaction is expected to close in mid-2025, pending regulatory approvals and other customary closing conditions.
The transaction is RGA’s second major deal in months, with the reinsurer also announcing a reinsurance agreement covering approximately US$4.1 billion in liabilities with John Hancock, a Manulife subsidiary.
On Equitable’s side, the group looks to raise its ownership in AllianceBernstein, supported by the over US$2 billion in capital unlocked through the transaction with RGA.
The capital generated will fund a tender offer to acquire up to 46 million units of AllianceBernstein, valued at around US$1.8 billion. If successful, Equitable's stake in AllianceBernstein would increase from about 62% to 77.5%, as per Reuters.
Additionally, the reinsurance transaction will facilitate $500 million in share repurchases, aligning with Equitable's strategy to focus on retirement, wealth management, and asset management sectors.
In 2021, Equitable also completed the sale of Corporate Solutions Life Reinsurance Company (CS Life Re) to Venerable Holdings Inc.
This transaction included the reinsurance of a legacy variable annuity block from Equitable Financial Life Insurance Company, representing US$36.5 billion in underlying account value and general account assets.
What are your thoughts on this story? Please feel free to share your comments below.
