Allianz Suisse Life has agreed to transfer to Resolution Re a legacy portfolio of individual life products, which have a reserve volume of around 4 billion Swiss francs ($4.3 billion).
Using quota share reinsurance, Resolution Re will assume 80% of the market and insurance risks of the legacy portfolio of individual life insurance products from Allianz Suisse. The products in the portfolio have been discontinued.
Both parties have agreed not to disclose the terms of the transaction, which complies with all the Swiss regulatory requirements.
Earlier this week, it was reported that Allianz was in advanced talks to transfer a block of Swiss life insurance assets to Resolution Life. The move, sources said, could free up regulatory capital as the insurer prepares for the financial hit from U.S. probes into its asset management arm.
“This transaction with Resolution Re benefits Allianz Suisse, the Allianz Group and the policyholders we serve by allowing us to de-risk the balance sheet while ensuring we continue to provide our customers with safe, long-term financial stability for the duration of their policies,” commented Remo Cavegn, chief risk officer of Allianz Suisse, in a statement released by Resolution Life, the parent company of Bermuda-based Resolution Re.
In its announcement about the portfolio transfer, Allianz said the transaction will strengthen the competitiveness and capital position of Allianz Suisse Lebensversicherung by improving its risk-return ratio in a sustainable manner.
Allianz noted that the persistent low interest rate environment over the past few years has prompted changes in the life insurance industry and led to this “innovative reinsurance solution to hedge interest rate commitments.”
“With this innovative solution, we are aiming to not only further strengthen our already solid capital position but also to reduce volatility in our solvency ratio,” commented Stefan Rapp, the CFO of Allianz Suisse. “We want to create scope for further growth and to ensure that our life business is ready for the future despite the major challenges.”
The transaction does not change anything for Allianz’s customers. Allianz Suisse will continue to service the reinsured business, while Resolution Re and Allianz Suisse will work in partnership for the benefit of policyholders and the continued successful management of the reinsured policies.
Monika Behr, the head of Life Business at Allianz Suisse, said the transaction is a milestone for the company. “The reinsurance helps us significantly in our goal to remain a strong and reliable partner for our customers in the life business over the long term.”
Resolution Re provides the primary life insurance sector with reinsurance solutions for de-risking legacy life insurance portfolios. Its parent company, Resolution Life, focuses on the acquisition and management of portfolios of life insurance policies. Resolution Life has previously acquired AMP Life in Australasia and in the U.S. it has acquired Voya Financial Inc.’s individual life in-force business as well as recently signing a reinsurance agreement with Lincoln National Corporation. Combined with the group’s Bermuda reinsurance base, Resolution Life currently manages approximately $60 billion of assets, employs over 1,500 people and provides services nearly 2.5 million policyholders.