Reinsurance Group of America (RGA) is actively working on transactions for its joint-venture, third-party capital backed, life and annuity reinsurance firm Langhorne Re, according to CEO Anna Manning.
Speaking recently, Manning explained that the firm’s deal pipeline remains strong.
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 proven attractive enough to complete, or not been won.
The pipelines for potential deals remains strong across all regions where RGA operates, Manning said.
Competition remains strong though and in the US market in particular there are a lot of competitors, while there are also a good range of deals sizes on offer.
But, “We’re winning our fair share,” Manning said.
Before going on to explain that, “We’re also working on Langhorne deals, and we’re optimistic about completing Langhorne transactions.”
Overall, Manning said that RGA feels good about the business and is optimistic moving forwards.
Now over three years into its life and without a completed transaction, the Langhorne Re strategy has yet to deliver for those involved or its investors.
However, the concept of bringing third-party capital into large life and annuity reinsurance deals has been proven by others, with players like Athene and Global Indemnity both having sidecar like structures that bring additional third-party investor capital alongside their own for transactions.
It seems likely to just be a matter of time before RGA finds and wins a suitable Langhorne Re transaction. But with other places to invest in this type of arrangement now available, we’d imagine investors are likely to become increasingly keen to see transactions begin to flow.