Artemis has learned that Langhorne Re, the third-party capitalised life and annuity reinsurance joint venture launched by RenaissanceRe (RenRe) and life focused reinsurer Reinsurance Group of America (RGA) back in 2018, is being wound down after its capital commitments expired without renewal.
Langhorne Re launched as a stand-alone reinsurance firm with $780 million of capital commitments in January 2018, with a strategy to write large life and annuity reinsurance opportunities alongside, or for, RGA, while specialist reinsurer RenaissanceRe’s third-party capital management division RenRe Capital Partners team managed the capital relationships and structural features.
The capital commitments were raised as equity, from a range of third-party investors including pension funds and life insurers, as well as commitments from the founding partners, RenRe and RGA.
It was seen as one of the first life and annuity vehicles that would operate to deliver returns to reinsurance-linked investors, while it would have also been the first sidecar-like structure that could augment RGA’s capacity in underwriting larger life and annuity reinsurance deals.
That concept, of a third-party capitalised sidecar-like structure sitting and underwriting alongside an established life and annuity reinsurance play has now become far more common, with a number of players having established complementary capital structures to assist them in entering into larger deals.
But Langhorne Re seemingly never got off the blocks, with no transactions entered into during its roughly four year life span.
After its launch, RGA, the life reinsurance underwriter, said that Langhorne Re was designed to increase its capacity and reach, enabling it to access larger in-force transactions on its own, rather than alongside other reinsurers.
RGA’s CEO had also pointed out that use of Langhorne Re was a better fit for the largest deals, that on its own would prove too big for the life reinsurer.
Langhorne Re was said to have come close to consummating its first deal in 2019, with a pipeline of deals said building by early 2020 and RGA’s CEO saying a first deal was imminent at the end of that year.
RGA’s CEO remained optimistic in 2021, that a first Langhorne Re deal would be sourced.
But now it transpires that no deal was ever entered into and we’ve learned that the capital commitments from investors have now expired at the end of 2022, and it seems the investors and the joint-venture partners have decided not to persist with their Langhorne Re efforts.
As a result, Langhorne Re is now being wound down, while equity investments made by the JV partners are likely to be returned, we understand.
As part of the winding-down, we’ve also learned that one of the Langhorne Re underwriting vehicles has been sold off, which will go some way to returning some of the expense-related investment made by the joint-venture partners, we suspect.
Back in 2018, Langhorne Re acquired Zale Life Insurance Company, an Arizona-domiciled life insurer with 47 state and District of Columbia licenses.
This life insurer was to be used as Langhorne’s main underwriting vehicle for the U.S marketplace.
Zale Life Insurance Company was renamed to Langhorne Reinsurance (Arizona) Ltd. soon after its acquisition by the company.
Now, we’ve learned that Langhorne Reinsurance (Arizona) Ltd. is being acquired by existing life and annuities market player American Equity Investment Life Holding Company.
It is perhaps surprising that Langhorne Re never quite got started, not least given the expertise sitting behind it, but the life and annuity reinsurance space is extremely competitive and capital reigns, as well as the structures and matching them to investor motivations.
The new breed of life and annuity sidecar vehicles that have launched in the last couple of years have been successful to-date and are structured in a specific way that seems to suit certain types of investors well.
It will be interesting to watch RGA over the coming years, to see if it tries to emulate those sidecar vehicles as a way to augment its capacity-base with third-party capital.
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