Close Close
ThinkAdvisor
A health insurance claim form

Life Health > Life Insurance

RGA Forms a $2.5B Sidecar

X
Your article was successfully shared with the contacts you provided.

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.

Sammons Financial is the West Des Moines, Iowa-based parent of Midland National and North American, two major annuity issuers.

Golub Capital is a New York-based investment firm that has already been working with RGA. The sidecar is the first it has formed.

HSCM Bermuda is an asset manager that previously invested in MassMutual’s new Martello Re affiliate.

Ruby Re: RGA has already transferred a block of $2.5 billion reinsurance business to Ruby Re through a “retrocession arrangement,” or a reinsurance arrangement for a reinsurer.

In the future, Ruby Re will automatically receive a share of other RGA reinsurance business, according to RGA.

Credit: Adobe Stock


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.