Goldman Sachs and Talcott Financial Group have raised $1 billion for a new Bermuda-based reinsurance vehicle, the companies confirmed. The vehicle, structured as a special-purpose insurer, will provide reinsurance capacity, with a focus on life and annuity risks.
How the deal works
The capital was raised through a private placement, with Goldman Sachs acting as the placement agent. Talcott Financial Group, a life reinsurer, will manage the vehicle's underwriting and day-to-day operations. The vehicle is domiciled in Bermuda, a jurisdiction that has become a global hub for reinsurance and insurance-linked securities.
Why Bermuda
Bermuda's regulatory framework and tax environment make it a preferred location for such vehicles. The island is home to dozens of similar structures that allow insurers and investors to transfer risk efficiently. This vehicle is expected to assume blocks of life insurance policies and annuity contracts from primary insurers, freeing up capital for those carriers.
Growing appetite for alternative capital
The deal highlights the increasing flow of alternative capital into the reinsurance sector. Life and annuity reinsurance, in particular, has drawn investor interest because of its long-duration liabilities and relatively stable returns. The $1 billion raise is one of the larger such transactions in recent months, though the vehicle's name has not been disclosed.
Talcott Financial Group has been active in the life reinsurance space, and this vehicle gives it additional capacity to compete for large blocks of business. Goldman Sachs, through its insurance-linked securities desk, has been involved in several similar placements over the past year.
The vehicle is expected to begin writing business in the coming months, pending final regulatory approvals in Bermuda. The companies did not provide a specific timeline for the first transactions.
