Leading U.S. life insurance, pension and annuity and reinsurance company, Global Atlantic, told us that it views its new life and annuity co-investment vehicle named Ivy as similar to the sidecars that characterize the insurance-linked securities (ILS) market.
Global Atlantic Financial Group Limited launched Ivy Co-Investment Vehicle LLC last week, with a structure designed to co-invest approximately $1 billion of capital in qualifying reinsurance transactions alongside the reinsurer and its subsidiaries.
In this way, the Ivy co-investment vehicle allows capital market investors to participate in the returns of the life reinsurance and annuity business alongside Global Atlantic, providing a new way to access this sector of the insurance market. insurance, while Ivy will support Global Atlantic’s ability to enter larger transactions.
We spoke with Manu Sareen, Head of Institutional business of Global Atlantic and Chief Executive Officer of his reinsurance entity Global Atlantic Re Limited to find out a little more about the motivations behind the launch of Ivy.
Sareen told us, “We see significant opportunities ahead to provide reinsurance solutions to life insurance and annuity companies while deploying capital according to our performance objectives. The creation of a co-investment vehicle allows Global Atlantic and Ivy to access this attractive and highly specialized market.
“We are excited about the flexibility Ivy and Global Atlantic will have to offer reinsurance to help new and existing clients achieve their strategic, risk management and capital goals.”
Ivy was launched with a specific role in mind, to help Global Atlantic increase its relevance to clients and close more or larger life reinsurance and annuity transactions with the institutional capital it brings in investors intended to increase the transaction capacity of reinsurers. .
Global Atlantic already sees real opportunities to start deploying capital from Ivy alongside its own capacity, Sareen explained.
“We are engaged in several conversations that provide a strong opportunity pipeline before looking at opportunities that the current environment may present,” Sareen said.
Hinting that there may be a growing demand for this type of reinsurance solutions at the moment, due to the effects of the coronavirus pandemic on the financial and insurance markets.
He continued: “Several clients are looking to raise capital through reinsurance while others are looking to exit non-core liabilities to minimize their exposure to interest rate and asset risk. We remain close to our US Life & Annuity clients to meet their risk and capital needs.
Telling Sareen that the Ivy co-investment vehicle looks likely to work as a sort of parallel structure for Global Atlantic, he agreed and pointed to the relatively unique opportunity the structure presents to investors.
“That’s a good question, thank you. The concept is very similar. In this case, we’re focusing on life and annuity insurance risk, rather than the more traditional P&C insurance risk typically associated with structures. We view these types of structures as opportunities that are not traditionally available in capital markets,” Sareen explained.
Sareen went on to highlight the appeal for capital market investors to partner with such an internationally recognized company as Global Atlantic.
“Over the past 15 years, our clients have embraced our level of service, deep insurance expertise, strong execution capabilities, A-level credit ratings and prudent approach to investment and asset management. risks,” he said.
Adding that “We believe this track record – coupled with additional capital capacity – will differentiate us as a reinsurance solutions provider, particularly in an environment of heightened macroeconomic uncertainty such as this.”