Prudential Financial has agreed to sell a portion of its in-force legacy variable annuity block to Fortitude Re for a total transaction value of $2.2 billion.
Under the terms of the agreement, Prudential will sell one of its stand-alone legal entity subsidiaries, Prudential Annuities Life Assurance Corporation (PALAC), including PALAC’s in-force annuity contracts, to Fortitude Re, for an all-cash purchase price of $1.5 billion.
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 $31 billion 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 will continue to service and administer all contracts in the PALAC block following the transaction to ensure a consistent experience for customers.
Prudential does not expect there to be any direct impact to employee head count as a result of the transaction.
“We are pleased to have reached an agreement with Fortitude Re, which represents another significant milestone in Prudential’s journey to becoming a higher growth, less market sensitive, more nimble company,” said Prudential Chairman and CEO Charles Lowrey.
“This transaction underscores how a partnership with the right expertise and financial strength can benefit our customers and investors, while also unlocking new opportunities for our businesses.”
“This transaction is an important step forward for Fortitude Re and demonstrates our expertise in delivering comprehensive and value enhancing solutions for our clients,” said Fortitude Re Chief Executive Officer James Bracken.
“Our strong, diversified balance sheet, proven risk management capabilities, and access to Carlyle’s asset origination franchise are key differentiators that enable us to responsibly manage complex, long-dated insurance liabilities. I am excited about the partnership with Prudential and the strategic opportunities this acquisition creates.”