Somerset Re closes $12.5bn transaction with Prudential

Somerset Reinsurance has closed a reinsurance transaction with Prudential Financial which includes $12.5 billion of reserves. 

The reserves back Prudential’s guaranteed universal life policies issued by Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey.

“Closing our third transaction with Prudential extends both Somerset’s track record of providing superior risk management solutions for asset-intensive liabilities and the long-time relationship between our companies,” said Jeff Burt, chairman and chief executive Officer of Somerset. “Somerset looks forward to building on that relationship and delivering exceptional service going forward.”

This transaction covers policies written prior to 2015 and represents approximately one-third of Prudential’s total guaranteed universal life statutory reserves. Prudential will continue to service the block. 

Wells Fargo Securities, LLC served as exclusive financial advisor and Willkie Farr & Gallagher LLP served as legal counsel to Prudential for the transaction. RBC Capital Markets served as financial advisor and Mayer Brown LLP served as legal counsel to Somerset Re for the transaction.

Prudential said previously it will continue to service the block and maintain its existing relationships with contract holders and distribution partners. Prudential does not expect there to be any direct impact to employee head count as a result of the transaction.

Prudential said it anticipated an increase in after-tax annual adjusted operating income of approximately $55 million, plus amortization of the cost or benefit of reinsurance, which is currently expected to be accretive to earnings, but will be finalised at closing.

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