Global Atlantic sees Ivy life & annuity investment vehicle as akin to a sidecar

Leading United States life, retirement and annuities insurance and reinsurance company Global Atlantic explained to us that it sees its newly launched life and annuity co-investment vehicle named Ivy as akin to the sidecars that are a feature of the insurance-linked securities (ILS) market.

Global Atlantic Financial Group Limited launched the Ivy Co-Investment Vehicle LLC last week, with the structure designed to co-invest roughly $1 billion of capital into qualifying reinsurance transactions alongside the re/insurer and its subsidiaries.

In this way the Ivy Co-Investment Vehicle enables capital market investors to participate in the returns of life and annuity reinsurance business alongside Global Atlantic, offering a new way to access that area of the insurance market, while Ivy will support Global Atlantic’s ability to enter into larger deals.

We spoke with Manu Sareen, Head of Global Atlantic’s Institutional business and Chief Executive Officer of its reinsurance entity Global Atlantic Re Limited to find out a little more about the motivations for launching Ivy.

Sareen explained to us, “We see significant opportunities ahead to provide reinsurance solutions for Life & Annuity companies while deploying capital at our target returns. The creation of a co-investment vehicle provides Global Atlantic and Ivy with access to this attractive and highly specialized market.

“We are excited about the flexibility Ivy and Global Atlantic will have to offer reinsurance to help new and existing clients meet their strategic, risk management and capital goals.”

Ivy has been launched with a specific role in mind, of helping Global Atlantic increase its relevance with clients and enter into more, or larger life and annuity reinsurance transactions, with the institutional capital it brings from investors set to augment the re/insurers deal capacity.

Global Atlantic already sees live opportunities to begin deploying capital from Ivy alongside its own capacity, Sareen explained.

“We’re engaged in several conversations that provide a robust pipeline of opportunities before considering the opportunities the current environment may present,” Sareen said.

Hinting that there is perhaps increasing demand for these kinds of reinsurance solutions at the moment, due to the effects of the coronavirus pandemic on the financial and insurance markets.

He continued, “Several clients are looking to raise capital through reinsurance while others are looking to exit non-core liabilities to minimize their exposure to interest rate and asset risk. We’re staying close to our US Life & Annuity clients to serve their risk and capital needs.”

Putting it to Sareen that the Ivy Co-Investment Vehicle seems likely to operate as a kind of sidecar structure for Global Atlantic, he agreed and pointed to the relatively unique opportunity the structure presents investors.

“This is a good question, thank you. The concept is very similar. In this case, we focus on life and annuity risk, rather than the more traditional property and casualty risk typically associated with sidecar structures. We view these types of structures as opportunities that aren’t traditionally available in the capital markets,” Sareen explained.

Sareen went on to highlight the attraction for capital market investors in partnering with a company as internationally recognised as Global Atlantic.

“Over the past 15 years, our clients have embraced our level of service, deep insurance expertise, strong execution capabilities, A-level credit ratings, and conservative approach to investment and risk management,” he commented.

Adding that, “We believe this track record – paired with additional capital capacity – will differentiate us as a reinsurance solutions provider, particularly in an environment of heightened macroeconomic uncertainty such as this one.”