RGA Announces $3.5 Billion Coinsurance Transaction with American National Insurance Company

Rhea-AI Summary

Reinsurance Group of America (NYSE: RGA) has announced a significant $3.5 billion coinsurance transaction with American National Insurance Company. The agreement involves RGA reinsuring a diversified block of life business from American National, with approximately $3.5 billion of statutory reserves being transferred to RGA subsidiaries. The transaction closed on August 26, 2024, with an effective date of July 1, 2024.

Key points of the deal include:

• American National retains policyholder service and support
• The agreement expands RGA's relationship with American National
• It demonstrates RGA's expertise in customized reinsurance solutions
• Wells Fargo acted as RGA's exclusive financial advisor
• Clifford Chance US LLP provided legal counsel for the transaction

Positive

• Secured a large $3.5 billion coinsurance transaction, potentially boosting RGA's revenue and market position
• Expanded relationship with American National, possibly leading to future business opportunities
• Demonstrated expertise in customized reinsurance solutions, enhancing RGA's competitive advantage

Negative

• None.

Insights

Financial Analyst

This $3.5 billion coinsurance transaction between RGA and American National is a significant deal in the insurance sector. It demonstrates RGA's strong capital position and ability to take on large-scale risks. For RGA, this means an immediate boost in statutory reserves and potential for increased long-term revenue streams. However, it's important to consider the risk profile of the acquired life insurance block.

For American National, this move likely aims to optimize capital efficiency and potentially improve their risk-adjusted returns. The transaction allows them to transfer risk while maintaining customer relationships. Investors should watch for potential impacts on both companies' financial ratios, particularly RGA's risk-based capital and American National's freed-up capital deployment strategies.

Insurance Industry Expert

This coinsurance deal highlights the ongoing trend of legacy block optimization in the insurance industry. RGA's willingness to take on $3.5 billion in statutory reserves indicates their confidence in managing diverse life insurance portfolios. The transaction's structure, where American National retains policyholder services, is a win-win scenario. It allows American National to reduce balance sheet risk without disrupting customer relationships, while RGA gains a substantial book of business.

The deal's timing, amid a complex regulatory and economic landscape, underscores the increasing importance of strategic risk management in the insurance sector. This transaction could potentially trigger similar deals in the market as insurers seek to optimize their portfolios and capital positions.

Market Research Analyst

This transaction reflects the growing appetite for reinsurance solutions in a challenging economic environment. RGA's expansion of its relationship with American National through this $3.5 billion deal signals strong market confidence in RGA's capabilities. The coinsurance structure is particularly noteworthy, as it allows for risk transfer without disrupting existing customer relationships.

From a market perspective, this deal could set a benchmark for similar transactions in the life insurance sector. It may stimulate increased activity in the reinsurance market, potentially leading to more competitive pricing and innovative structuring of deals. Investors should monitor how this transaction impacts both companies' market valuations and whether it triggers a wave of similar deals in the industry.

ST. LOUIS--(BUSINESS WIRE)-- Reinsurance Group of America, Incorporated (NYSE: RGA), a leading global life and health reinsurer, today announced it has reached an agreement with American National Insurance Company and its affiliates (collectively, “American National”) to reinsure a diversified block of life business through a coinsurance arrangement. Under the agreement, approximately $3.5 billion of American National’s statutory reserves will be transferred to subsidiaries of RGA. Policyholder service and support will remain with American National.

"We're pleased to expand our relationship with American National as a valued client through this tailored coinsurance agreement. This transaction exemplifies our close collaboration with clients and comprehensive understanding of their needs, enabling us to execute solutions aligned with their strategic business objectives," said Senan O’Loughlin, Executive Vice President, US Individual Life, RGA. "Our proven expertise in customized reinsurance empowers us to deliver robust risk management solutions that provide insurers financial flexibility to help them navigate today’s complex regulatory and economic landscape."

The transaction closed on August 26, 2024, with an effective date of July 1, 2024.

Wells Fargo served as exclusive financial advisor to RGA and Clifford Chance US LLP served as legal counsel in the transaction. Additional terms of the transaction are not being disclosed.

About RGA

Reinsurance Group of America, Incorporated (NYSE: RGA) is a global industry leader specializing in life and health reinsurance and financial solutions that help clients effectively manage risk and optimize capital. Founded in 1973, RGA is today one of the world’s largest and most respected reinsurers and remains guided by a powerful purpose: to make financial protection accessible to all. As a global capabilities and solutions leader, RGA empowers partners through bold innovation, relentless execution, and dedicated client focus — all directed toward creating sustainable long-term value. RGA has approximately $3.8 trillion of life reinsurance in force and assets of $109.9 billion as of June 30, 2024. To learn more about RGA and its businesses, please visit rgare.com or follow RGA on LinkedIn and Facebook. Investors can learn more at investor.rgare.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240827179147/en/

Lynn Phillips

Vice President, Corporate Communications

636-736-2351

lphillips@rgare.com

Lizzie Curry

Executive Director, Public Relations

636-736-8521

lizzie.curry@rgare.com

Jeff Hopson

Senior Vice President, Investor Relations

636-736-2068

jhopson@rgare.com

Source: Reinsurance Group of America, Incorporated

FAQ

What is the value of the coinsurance transaction between RGA and American National?

The coinsurance transaction between RGA and American National is valued at approximately $3.5 billion in statutory reserves.

When did the RGA and American National coinsurance transaction close?

The transaction closed on August 26, 2024, with an effective date of July 1, 2024.

What type of business is RGA reinsuring from American National?

RGA is reinsuring a diversified block of life business from American National Insurance Company and its affiliates.

Who will handle policyholder service and support after the RGA-American National transaction?

Policyholder service and support will remain with American National after the transaction.