Cowdery’s Resolution raises $3bn for legacy life insurance investments

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Resolution Life, the life insurance focused arm of insurance entrepreneur Clive Cowdery’s Resolution Group, has now raised $3 billion in capital commitments to put to work in its legacy life insurance linked investment strategies.

resolution-life-logoResolution’s strategy sees it taking on large books of life insurance business, using fund-like capital structures backed by institutional investors, channelling returns and profits back to them in the form of dividends.

The company has established a number of permanent capital structures over the years, focusing on acquiring and managing in-force portfolios of life insurance and reinsurance risk, to the benefit of the vehicles institutional investor backers.

The transactions see Resolution Life effectively providing reinsurance for the legacy books of life business, in order to acquire the premium assets and manage them through to the policies conclusion. The company uses its Bermudian reinsurance platform Resolution Re to enter into deals with legacy risk holders.

Leveraging the appetite of institutional investors, Resolution Life said this morning that it has now closed its latest capital raise with $3 billion of commitments secured since September 2018.

The company said that the funds raised will be deployed in line with its focus on legacy life insurance business, either through acquisition of companies or reinsurance transactions.

Resolution Life is backed by leading financial institutions, insurance companies, pension plans, sovereign wealth funds and family offices, so a similar investor base to the insurance-linked securities (ILS) market.

The Resolution Life Group Holdings board counts some of its major investors as members as well, including JPMorgan Chase, KKR & Co. Inc., Nippon Life Insurance Company, Temasek, The Universities Superannuation Scheme and a Middle Eastern sovereign wealth fund, the company explained.

Sir Clive Cowdery, Executive Chairman of Resolution Life, commented on the news of the capital raising success, “Over the past 16 years Resolution entities have served the needs of the life insurance industry globally. Resolution Life will continue to grow and release trapped capital and stranded costs for life insurers across a number of markets. I am delighted to welcome our cornerstone investors onto our Board.”

In addition today, Resolution said that its acquisition of AMP Life in Australia, a deal valued at AU $3 billion, is still expected to close in the first-half of 2020. AMP had previously said the deal may not go ahead, but Resolution appears to have met the terms required to secure this transaction as well.

Extracting profitable value from large portfolios of life insurance risk is an attractive strategy to institutional investors, as well as to large global reinsurance groups.

It take significant expertise to manage these books of business and companies, while achieving certain economies of scale is also vital if the life insurance books and businesses are to run profitably and deliver the returns anticipated, better than their original owners could have managed.

Resolution and others like it underscore the attractiveness of insurance-linked investment returns, as many of the larger institutional ILS fund investors also back these kinds of open and closed life book vehicles.

It’s also another example of institutional money from the capital markets being used as reinsurance capital to underwrite deals, delivering the returns to backers through a fund-like structure.

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