New $1 billion long term re/insurer formed in Bermuda

Life insurance giant Prudential Financial and investment bank Warburg Pincus have joined forces to launch $1 billion Bermuda-based long term reinsurer Prismic Life Reinsurance.

The companies said Prudential will reinsure to Prismic, a Class E reinsurer, a block of structured settlement annuity contracts with reserves of approximately $10 billion, subject to receipt of required regulatory approvals.

Following the transaction, Prudential aims for Prismic to be a strategic reinsurance partner with the ambition to grow their reinsurance relationship materially in years to come. PGIM and Warburg Pincus will provide asset management services to Prismic.

Prudential said its obligations to the holders of these annuities will remain unchanged following the reinsurance arrangement and Prudential will continue to administer the contracts.

The companies said: “Through expanded reinsurance capacity, Prudential expects Prismic will allow the company to provide more people with access to its industry-leading life and annuity products.”

Prismic will be led by Amy Kessler, a 30-year financial services industry veteran, who will serve as CEO. Kessler was the founding leader of Prudential’s international reinsurance business.

Nandini Mongia, president of Prudential’s Open Architecture Solutions, will represent Prudential on Prismic’s board. Mongia most recently served as Prudential’s treasurer where she played a leading role in the creation of this reinsurance platform. Mike Thompson, managing director, will represent Warburg Pincus on Prismic’s board.

Charles Lowrey, chairman and CEO of Prudential Financial said: “This unique reinsurance platform will play an important role in our vision to be a global leader in expanding access to investing, insurance, and retirement security for people around the world.

“Prismic will enhance our ability to address the evolving needs of our insurance customers and clients while continuing to meet our obligations to policyholders. It represents a formidable combination of industry-leading expertise, global capabilities, and the backing of two of the world’s leading insurance and asset management firms.”

Warburg Pincus CEO Chip Kaye said: “Warburg Pincus is thrilled to enter into this strategic partnership with Prudential in the creation of Prismic. The combination of Prudential’s significant in-force and new business origination capabilities, PGIM’s expertise in public fixed income, private credit, and real estate with our private markets investment capabilities presents Prismic with a unique opportunity for future, sustainable growth.

“Prismic’s strategy of enhancing long-term investment returns through an end-to-end ecosystem of liability origination, asset-liability management, and asset management clearly aligns with our focus on long-term fundamental value creation. We look forward to the partnership with Prudential and the success of Prismic.”

A group of global investors has agreed to make equity investments in Prismic, alongside Prudential and Warburg Pincus, giving Prismic a combined initial equity investment of $1 billion. Prudential and Warburg Pincus will initially own 20% and 15% of the equity in Prismic, respectively. Prismic’s board will include two independent directors and one director nominated by each of Prudential, Warburg Pincus, and the group of investors.

“Prismic will leverage PGIM’s and Warburg Pincus’ global investment management capabilities across public and private markets, including public fixed income, private credit, private real estate, and private equity.

“Prismic will become a client of PGIM Portfolio Advisory, a newly established affiliate within PGIM that combines asset-liability management expertise with portfolio strategy and asset allocation to deliver integrated solutions across public and private asset classes.”

Warburg Pincus has more than $83 billion assets under management and has been an active investor in re/insurance ventures, including Aeolus Re, Arch Capital, McGill & Partners, RenaissanceRe, and Somers Re.

Bermuda has been the hub for a rapid expansion of long-term life reinsurers. At the end of 2021, Class E reinsurers in Bermuda had assets of more than $800 billion.