Global alternative asset manager, Apollo Global Management, Inc., has closed an agreement for its affiliated companies, third-party insurance managed accounts, and other institutional clients to invest $500 million into surplus notes issued by Reinsurance Group of America’s (RGA) wholly owned indirect subsidiary, Chesterfield Reinsurance Company.
This bespoke, high-grade investment solution was Apollo’s second transaction with RGA and utilised cross-platform expertise, including in insurance, insurance-linked securities (ILS), and multi-asset credit.
“Apollo is pleased to serve as a long-term strategic capital partner to some of the world’s leading reinsurance companies, a role we believe we are uniquely positioned to fill,” said Apollo Partner, Jamshid Ehsani.
“Our ability to structure creative, scaled solutions at a wide range of capital costs differentiates us from other platforms and provides attractive investment opportunities for our affiliated and third-party insurance clients and other investors seeking high quality credit,” added Ehsani.
Chesterfield Reinsurance entered into a subscription agreement with the unaffiliated financial institutions as purchasers on March 23rd, 2023, pursuant to which it has issued to the purchasers 7.125% surplus notes due 2043. The aggregate principal amount of surplus notes issued pursuant to the agreement is $500 million.
The reinsurer intends to use a portion of the proceeds to fund a ceding commission paid to RGA in connection with assets and insurance liabilities transferred to Chesterfield Re. It will use the rest of the proceeds for general corporate purposes.
So, this appears to be an insurance-linked investment with Apollo backing life insurance related liabilities and assets that RGA has ceded to Chesterfield Re, while RGA will essentially benefit from the capital that helps it to write more business.
For the transaction, Latham & Watkins served as legal counsel to Apollo, and Sidley Austin acted as legal counsel to RGA.
Structuring and syndication services in connection with the transaction was provided by Apollo Capital Solutions.