Specialist reinsurer and third-party capital manager Renaissance Re (RenRe) and life focused reinsurer Reinsurance Group of America (RGA) have teamed up to launch a third-party capital backed life and annuity reinsurance start-up named Langhorne Re.
Langhorne Re will launch with $780 million of capital commitments raised as equity, from third-party investors that include pension funds and life insurers, as well as commitments from the founding partners, RenRe and RGA.
The third-party capital backed start-up reinsurer will operate on a global basis and target underwriting large in-force life and annuity blocks.
Langhorne Re will be Bermuda headquartered, but with operations in the U.S. as well. The firm aims to have the capacity to support transactions featuring multi-billion dollar legacy blocks of life insurance and reinsurance or annuities business.
RenaissanceRe has put its third-party reinsurance capital management experience to work for a life insurance focused venture for the first time here, teaming up with experienced reinsurer RGA Re.
Langhorne Re combines the underwriting experience of RGA Re in life risks with the third-party capital management expertise of RenRe, in what will be a compelling opportunity for the investors backing it.
The in-force life and annuities space is one targeted by major private equity players and other pension fund backed reinsurers, as it can offer attractive long-term returns.
The founding partners said that Langhorne Re will combine a, “long-term capital base with underwriting and third-party capital management support from RGA and RenaissanceRe to purchase large in-force life and annuity blocks, allowing clients to de-risk and optimize their capital management.”
The aim will be to make a greater profit from the annuities and life books, or manage them more efficiently, than their original underwriters, thus freeing up capital for the ceding companies and enabling them to trade forwards, while Langhorne Re will manage the books through to completion, or perhaps in some cases retrocede portions of the risk.
Ventures in this life and annuities space can be very attractive to those seeking ways to put capital to work over longer period, hence it can suit certain pension funds and life insurers as an investment opportunity.
“We are very pleased to announce the launch of Langhorne Re with our strategic partner, RenaissanceRe,” stated Scott Cochran, Executive Vice President, Corporate Development and Acquisitions, RGA. “Powered by the complementary and industry-leading capabilities of RGA and RenaissanceRe, Langhorne Re is uniquely positioned to provide competitive and flexible solutions that expand RGA’s existing client offerings.”
“RenaissanceRe’s experience with managing third party capital and sophisticated risk management combined with RGA’s experience in the life market make this a very attractive partnership,” explained Aditya K. Dutt, President, Renaissance Underwriting Managers, Ltd. “As a result, we expect both clients and policyholders will benefit from our long-term approach and track record of capital stewardship.”
Barclays acted as a financial advisor and Sidley Austin LLP as a legal advisor for Langhorne Re.
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