RGA launches life reinsurance sidecar Ruby Re. Hudson Structured a backer

Reinsurance Group of America (RGA) has announced the launch of a new Missouri-domiciled third-party life reinsurance sidecar company named Ruby Reinsurance Company (Ruby Re), which has been backed by a number of investors including insurance-linked securities (ILS) specialist Hudson Structured Capital Management.

Ruby Re will target the underwriting of U.S. asset-intensive life reinsurance business, but it will operate as a kind of sidecar reinsurance structure, as it will reinsure business from RGA and will not face clients directly.

RGA said that Ruby Re has closed its first round of funding, securing equity capital commitments from lead investors Golub Capital, Hudson Structured Capital Management Ltd. (operating as HSCM Bermuda), and Sammons Financial Group.

To begin its sidecar operations, RGA will retrocede a block of $2.5 billion of existing liabilities to Ruby Re.

After that, Ruby Re will automatically receive a quota share from RGA of all future qualifying life reinsurance business, subject to a range of conditions such as meeting underwriting standards and regulatory approvals.

“As a pioneer in the asset-intensive business, I am excited about the next step in our continuing support for this growing market segment,” explained Tony Cheng, President, RGA. “Ruby Re provides RGA with alternative capital that expands our capacity at attractive terms benefiting our clients, shareholders, and Ruby investors.”

Ruby Re will represent an efficient way for RGA to bring third-party capital into its US life reinsurance business, to augment its underwriting capability and capacity.

At the same time it will provide a source of life reinsurance linked returns to its investors, through a partnership with one of the leading global writers of life risks.

RGA has been planning third-party capital strategies for a while now and had previously partnered with RenaissanceRe on the Langhorne Re venture, but that was shuttered a while back.

“This is Golub Capital’s inaugural insurance capital sidecar transaction and is a culmination of a shared investment approach and valuable partnership with RGA since 2010,” added Gregory Robbins, Vice Chair of Golub Capital. “We are delighted to be able to leverage our financing capabilities to support RGA’s continued growth.”

“We are excited to be partnering with RGA. The combined capabilities of Ruby Re, along with RGA’s outstanding reputation and underwriting, will allow us to quickly establish a dynamic new platform in the fast-growing asset-intensive market,” Gokul Sudarsana, Managing Director and Chief Actuary, HSCM Bermuda said.

“For decades, we have recognized RGA as one of our trusted partners and are excited to be a lead investor in Ruby Re,” explained Esfand Dinshaw, Sammons Financial Group Chief Executive Officer. “We are proud to continue to build upon our strong relationship in support of our long-term growth strategy.”

Investor Golub Capital also noted the launch of the Ruby Re life reinsurance sidecar as a deepening of its relationship with RGA.

Golub Capital has provided investment solutions to RGA since 2010 and said that the Ruby Re transaction is “a culmination of a valuable long-term partnership, a shared investment approach and a strategic growth opportunity for both firms.”

Golub Capital’s lead investment in Ruby Re is also its first insurance capital sidecar allocation.

“While we have an established track record of providing capital efficient investment solutions to insurance companies, this expanded partnership with RGA marks a foundational milestone for Golub Capital as a provider of strategic capital to our insurance partners,” said Gregory Robbins, Vice Chair of Golub Capital. “We view capital solutions as an important avenue of future partnership with insurance company clients alongside our longstanding investment and capital efficient structuring capabilities. This transaction provides a replicable model for similar opportunities in the future.”