Analysts at AM Best have confirmed that they have a net positive view on the recent deal entered into by Allianz to reinsure a $35 billion fixed index annuity portfolio.
Allianz announced the deal with Resolution Life and affiliates of Sixth Street, including Talcott Resolution Life Insurance Company, last week.
Following the announcement, AM Best said its credit ratings remain unchanged for Allianz Life Insurance Company of North America (Allianz Life) (Minneapolis, MN) and its wholly owned subsidiary, Allianz Life Insurance Company of New York (Allianz New York).
The reinsurance arrangement includes 100% quota share reinsurance for a closed FIA book and a 50% quota share for an open FIA book, as well as collateral and multiple layers of protection.
Allianz Global Investors and Pacific Investment Management Company, LLC (PIMCO) will remain the primary asset managers of the reinsured business after the deal, while Allianz Life will continue to manage administration of the policies and provide support to Allianz Life’s U.S. policyholders.
AM Best sees the transaction as being in line with Allianz Life’s strategy to unlock value in its life insurance business, manage capital on its balance sheet and increase synergies with its asset management business, and therefore sees it as net positive.
The agreement is also expected unlock $4.1 billion in value and free up regulatory capital for Allianz, and to improve its return on equity by about 6 percentage points to approximately 18% on a proforma basis as of Sept. 30, 2021.