Global Atlantic Adds $2.4B in Life and Annuity Deal Cash

What You Need to Know

The list of Ivy II shareholders includes high-net-worth individuals as well as institutional investors.
An earlier Ivy I fund had $1 billion in capital.
A Global Atlantic executive sees less competition for reinsurance deals.

A subsidiary of KKR has raised $2.4 billion in reinsurance deal money from outside investors.

Global Atlantic announced Monday that it plans to use the cash to provide reinsurance for life insurance and annuity issuers.

Manu Sareen, co-president of Global Atlantic, said this is a great time to have a big new pool of reinsurance capital.

Factors driving strong demand for reinsurance include “industry-wide restructuring, an evolving macroeconomic environment, and lower availability of historical sources of capital for the industry,” Sareen said.

What It Means

For clients with life insurance policies and annuity contracts, the deal may mean that more of their business will come into the orbit of Global Atlantic and other relatively new reinsurers.

For clients looking for investment ideas, Global Atlantic’s strategy is a sign that some big money managers see this as a great time for strong players to take a little risk.

Reinsurance

Reinsurance is insurance for insurance companies.

U.S. life and annuity issuers use reinsurance to protect themselves against the risk that life insurance insureds might die sooner than expected and the risk that annuity holders will live longer than expected.

Issuers can also use reinsurance to achieve other goals, such as shifting day-to-day oversight over unwanted blocks of business into the hands of a company that might come under different accounting, capitalization or financial reporting rules than the company that originally wrote the business.

The company that wrote the business continues to have the ultimate responsibility for the business, in spite of the existence of reinsurance agreements.