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MS&AD and Challenger announce US dollar annuity reinsurance deal

28th June 2019 - Author: Luke Gallin

MS&AD Insurance Group Holdings, Inc. has expanded its strategic relationship with Australian life & annuities specialist Challenger through a quota share reinsurance arrangement of US dollar denominated annuities.

mergers and acquisitionsChallenger has announced that it’s received all necessary regulatory approvals and has implemented the operational requirements in order to commence US dollar annuity reinsurance.

Under the agreement, MS Primary, a subsidiary of MS&AD, will provide Challenger Life with an annual amount of reinsurance across both Australian and US dollar annuities, of at least AUD 670 million (50 billion yen) each year, for a minimum of five years.

Richard Howes, Chief Executive Officer (CEO) of Challenger, said: “The expanded alliance with MS&AD will leverage the strengths of both businesses to create opportunities for continued growth. Having now received all necessary approvals, the commencement of US dollar reinsurance will broaden our access to the Japanese market while providing product and distribution diversification.”

Japanese insurance group MS&AD acquired a stake in Challenger in August 2017, investing AUD 500 million to take a 6.3% stake in the company.

Prior to this, the pair already had a partnership that saw Challenger offering Australian dollar denominated annuities into the Japanese market.

The company deepened their relationship earlier this year via a new quota share reinsurance deal covering annuities that were also issued by MS&AD’s subsidiary, MS Primary.

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