RGA (Reinsurance Group of America) has announced a significant reinsurance deal with Equitable Holdings, expanding their existing strategic alliance.
RGA will reinsure 75% of Equitable’s in-force life insurance liabilities. This block comprises roughly $18 billion in general account reserves and $14 billion in separate account reserves.
RGA anticipates dedicating $1.5 billion of capital to this reinsurance transaction upon closing, reflecting the capital required to support the block.
The company projects that this transaction will generate about $70 million in adjusted operating income before taxes in 2025, assuming a mid-year effective date. Adjusted operating income before tax is expected to rise to between $160 million and $170 million in 2026, and eventually reach around $200 million annually. The earnings contributions are expected to benefit from re-aligning a portion of the asset portfolio transferred as part of the transaction, better aligning it with RGA’s asset strategy.
RGA plans to fund the transaction using surplus capital and, subject to market conditions, proceeds from a potential debt financing. Equitable will continue to handle direct policyholder administration and support.
The transaction is scheduled to close in mid-2025, pending customary closing conditions, including regulatory approvals.
“We are very excited about the partnership we have created with Equitable. This transaction affirms our ability to execute on large in-force opportunities and demonstrates RGA’s unique ability to support clients’ new business efforts with product underwriting and biometric expertise. This partnership is an example of our capacity to provide creative solutions and technical expertise that support both sides of the balance sheet, and it is a prime example of how the execution of our Creation Re strategy can address our clients’ current and future needs.” – Ron Herrmann, Executive Vice President, Head of the Americas, RGA.
“Our strong financial position enables us to capitalize on this opportunity with Equitable, and the transaction is expected to meaningfully contribute to RGA’s earnings per share, with anticipated attractive returns on capital. We anticipate raising capital in connection with this transaction through the issuance of long-term debt, and we expect to continue to be in a position to execute on other attractive opportunities in our pipeline, while maintaining prudent capital management.” – Axel André, Executive Vice President, Chief Financial Officer, RGA.
