RGA Forms a $2.5B Sidecar

Reinsurance Group of America has a new tool it can use to share life and annuity risk with outside investors.

The company has started Ruby Reinsurance Co., a reinsurance “sidecar,” or arrangement that lets a reinsurer team with other capital providers, and sent Ruby Re $2.5 billion in business.

Golub Capital helped RGA set up the sidecar and raise the capital. In addition to Golub, the list of investors includes Hudson Structured Capital Management’s HSCM Bermuda affiliate and Sammons Financial.

Tony Cheng, who became RGA’s president in January, said in a comment included in the deal announcement that the company sees starting Ruby Re as a way to offer more “asset-intensive reinsurance,” or risk management arrangements for issuers of variable and indexed life and annuity products.

“Ruby Re provides RGA with alternative capital that expands our capacity at attractive terms,” Cheng said.

What it means: The companies that provide clients’ life insurance policies and annuities can still attract capital.

The players: RGA is a Chesterfield, Missouri-based life reinsurer, or company that sells arrangements that help life, health and annuity insurance companies manage their own risk. It has $87 billion in assets and $3.5 trillion of life reinsurance in force.