Bermuda-based Ivy Re partners Global Atlantic in $8.5bn deal with Unum
Global Atlantic Financial Group, US-focused retirement, life insurance and reinsurance company, has signed a reinsurance transaction with Unum Group involving a closed block of seasoned individual disability income business backed by $8.5 billion in assets.
Bermuda-based Ivy Re, a co-investment vehicle formed in April this year, will invest alongside Global Atlantic’s subsidiaries. Business ceded to Ivy will be managed using Global Atlantic’s risk and investment management capabilities. In total following this transaction, Ivy will have deployed approximately 60 percent of its capital commitments.
The transaction will close in two phases, with approximately $7 billion in assets closing concurrent with signing and the remaining $1.5 billion expected to close in the first quarter of 2021, pending receipt of any required approvals and consents. This is the third block reinsurance deal for Global Atlantic in 2020, totalling over $16 billion of assets.
Over 95 percent of the block is comprised of spread-based claim reserves that pay a steady income stream to the policyholder, similar to fixed payout annuities. The balance of the block is active life policies not on claim.
Additionally, Unum will provide a volatility cover on these active lives, thereby reducing any material disability risk for Global Atlantic on this business. Unum will continue to administer the business and retain all policyholder servicing and operations functions.
“We are pleased to provide a long-term solution that meets Unum’s capital objectives and strategic goals for its legacy closed block of individual disability income business,” said Manu Sareen, president of Global Atlantic’s Institutional business. “This is a seasoned run-off block of business with a rich history of data and stability of cash flows that are very attractive to Global Atlantic.”
Unum Group’s CEO Richard McKenney added: “Global Atlantic’s experience in executing block deals like these made them an ideal partner for us. The team’s collaborative approach resulted in a custom solution tailored specifically to meet our financial objectives.”