Global Atlantic Financial Group, a majority-owned subsidiary of KKR ( NYSE: KKR ), agreed to reinsure a portion of Equitable Financial Life Insurance Co.'s ( NYSE: EQH ) group retirement annuities. The business that Global Atlantic will reinsure currently has $10B in general account and separate account value.
For Equitable ( EQH ), the deal mitigates its remaining $1B of redundant reserves associated with New York's Regulation 213. Global Atlantic will reinsure a 50% quota share of Equitable's pre-2009 Group Retirment VA contracts, supported by ~$4B of general account assets and $6B of separate account value.
Equitable ( EQH ) will retain servicing and administration of the policies and separate account funds, which will be ceded on a modified coinsurance basis. EQH expects the deal to result in positive ceding commission of ~$1.1B to Equitable Financial, which the company will use to fund the remaining Reg. 213 redundant reserves, securing future cash flows.
Equitable ( EQH ) will transfer general account assets to Global Atlantic, expected to occur in H2 2022. The company expects Group Retirement operating earnings to be reduced by $10M-$15M per year.
The deal marks Global Atlantic's second block reinsurance transaction in 2022, after it reinsured a block of annuities totaling $4B in March. Since the company started in 2004, Global Atlantic has reinsured ~$80B of assets.
In Tuesday morning trading, Equitable Holdings ( EQH ) stock rose 0.2% .
In February, KKR ( KKR ) said Global Atlantic Financial recapitalized a ~$1.7B portfolio of office properties
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KKR's Global Atlantic in $10B group annuity reinsurance pact with Equitable