7 May 2013

Goldman Sachs sells majority stake in reinsurance arm

Goldman Sachs has sold a majority stake in Global Atlantic, formerly known as Goldman Sachs Reinsurance Group, to high net worth clients and institutions. Goldman Sachs retains a minority stake in the company.

Talking on a recent investor call, Harvey Schwartz, executive vice president and CFO of Goldman Sachs Group said: “in the insurance business we’re in the midst of the sale process. The driver here was the amount of capital that business attracts under the new rule set. So we like that business; but under the new capital rules it is really better held in other people's hands. So it just felt like it was appropriate to move forward with the sales process.”

AM Best has since placed two of Global Atlantic's subsidiaries - Commonwealth Annuity and Life
Insurance Company and its subsidiary, First Allmerica Financial Life Insurance Company (FAFLIC) - under review with negative implications for their respective financial strength ratings. The negative outlook reflected "the loss of the Goldman Sachs brand and capital support as Global Atlantic will need to establish new brand awareness and implement certain infrastructure and systems capabilities as a stand-alone entity."