Reinsurance Group of America (RGA) remains confident that its joint-venture, third-party capital backed life and annuity reinsurance firm Langhorne Re will secure its first transaction “in due course”, according to the company’s CEO Anna Manning.
Speaking with analysts from Credit Suisse recently, Reinsurance Group of America (RGA) displayed optimism that Langhorne Re could close its first deal relatively soon.
Langhorne Re was launched by RGA alongside joint-venture partner RenaissanceRe (RenRe), the Bermudian reinsurer and experienced third-party reinsurance capital manager.
Langhorne Re, which launched at the start of 2018, represents the first venture into life and annuity reinsurance for RenRe, which is more typically known for its property catastrophe reinsurance focused joint-ventures with pension investors and its ILS funds or structures.
The reinsurer was established to augment RGA’s capacity to engage in large in-force block life transactions, helped by the backing of third-party institutional investors from the capital markets. The vehicle will also generate fee income for both of the joint-venture partners and features investor capital with a longer-term horizon than your more typical catastrophe risk focused insurance-linked securities (ILS) JV.
But, a first transaction has been elusive, partly due to the high levels of competition seen in the market for the very large life and annuities type transactions that Langhorne Re targets.
Langhorne Re is ready to go and has been actively bidding on opportunities in the market over the last year, but deals have so far not proved attractive enough to complete on, or not been won.
The analysts from Credit Suisse discussed progress with Langhorne Re with RGA’s senior exec team and they explained the venture as part of RGA’s strategy to expand both risk-taking and fee-based business.
RGA has a minority stake in Langhorne Re, with the vehicle targeting the kind of $5 billion or larger and more complex transactions that RGA wouldn’t typically enter into on its own.
The analysts explained that the deals Langhorne Re targets are “larger than ones that RGA would place on its own balance sheet, but carry similar risk characteristics.”
CEO Manning said that RGA has been actively working on deals for Langhorne Re and got “quite far along” with a few, although didn’t execute on any so far.
However, the CEO said that she remains optimistic that Langhorne Re will secure its first deal “in due course”.