Fortitude Re has completed its purchase of $31bn of traditional variable annuities from Prudential Financial.
The agreement, originally announced in September last year, will see Fortitude Re acquire Prudential Annuities Life Assurance Corporation (PALAC) and rename it Fortitude Life Insurance & Annuity Company.
Included in the sale is approximately $31bn of in-force variable annuity account values, primarily consisting of non-New York, traditional variable annuities with guaranteed living benefits that were issued by PALAC prior to 2011.
James Bracken, CEO of Fortitude Re, said: “Closing on this transaction marks a significant milestone for Fortitude Re. We have demonstrated to Prudential, its policyholders and other stakeholders that our commitment to capital strength, a professional client experience and deep liability expertise can help our insurance clients achieve their strategic goals.”
He added: “We will continue to build our capabilities in partnership with Carlyle, enabling us to take on industry-shaping transactions, and to continue on our journey towards becoming a leading provider of solutions to global insurers.”
As we reported last year, Prudential was to sell PALAC to Fortitude Re for an all-cash purchase price of $1.5bn. The PALAC block primarily consists of non-New York traditional variable annuities with guaranteed living benefits that were issued prior to 2011, which constitute approximately $31bn or 17% of Prudential’s total in-force individual annuity account values as of June 30, 2021.
PALAC is considered complementary to Fortitude Re’s capabilities in designing tailored solutions for insurers that enhance capital efficiency and address strategic priorities.
Prudential said it will continue to service and administer all contracts in the block following the transaction. Prudential also will continue to sell protected outcome annuity solutions through other existing subsidiaries.
Debevoise & Plimpton LLP served as legal counsel to Fortitude Re. Sidley Austin LLP served as legal counsel to Prudential, and Goldman Sachs & Co. served as exclusive financial advisor.