Insurance entrepreneur Clive Cowdery, the founder of life book investor Resolution Group, is reported to be raising capital for a new Bermuda investment fund that will continue to target backing closed-books of life insurance business with reinsurance capital.
Resolution has set up a number of permanent capital structures over the years, focusing on acquiring and managing in-force portfolios of life insurance to the benefit of the vehicles institutional investor backers, effectively reinsuring the books of life business in order to acquire the premium assets and manage them through to the policies conclusion.
Cowdery has previously said that the life insurance industry was “overrun” with inefficient, smaller companies, as his Resolution Group and Resolution Life re/insurer looked to consolidate this by creating what would effectively act as a warehousing reinsurance vehicles for life books, aiming to extract a greater profit from the business than its underwriters through the economies of scale and use of efficient third-party, institutional capital.
Reuters reported yesterday that Cowdery is back in the market raising a new closed life investment vehicle or fund, citing a source that told the news agency that the new vehicle would be a Bermuda-based investment fund targeting the reinsurance of closed-book life insurance businesses in the United States and Europe.
The sources told Reuters that Jonathan Moss, currently Chief Financial Officer of Aviva’s French operations, is slated to run the investment fund.Moss was previously CEO of what became the Phoenix Group when it acquired Cowdery’s first Resolution fund in 2008.
Cowdery is in the process of winding down his third fund, which was focused solely on U.S. life insurance business, Reuters said.
He is seeking commitments from investors to the tune of “a couple of billion dollars,” sources told the news agency.
Any new venture seeking to acquire closed life insurance books will face still competition from the likes of Swiss Re’s Life Capital business, Wilton Re, Athene and other major investment and reinsurance players who like to back large portfolios of life and annuity policies.
Extracting profitable value from large portfolios of life risk is attractive to institutional investors, but it does take significant expertise to manage these businesses, while achieving certain economies of scale is also vital if the books are to run profitably.
It’s another example of how attractive insurance-linked returns are and many of the larger institutional ILS fund investors would also back such closed-life book efforts. It’s also an example of institutional money from the capital markets being used as reinsurance capital by a fund structure.
Cowdery has quite the track-record in this area, having been backed previously bu stalwart investors such as Blackstone and Prudential. Over the years his Resolution Group has made more than $20 billion of acquisitions and raised $8 billion of equity backing,