Ameriprise offloads $1.7 billion in fixed annuities

Firm is trying to shift its business mix, freed up $200 million in capital

Mar 20, 2019 @ 11:49 am

By Greg Iacurci

Ameriprise Financial Inc. has offloaded $1.7 billion in fixed-annuity liabilities to Global Atlantic Financial Group, representing roughly 20% of the company's fixed-annuity account balances, the firm announced Tuesday.

Commonwealth Annuity and Life Insurance Co., a Global Atlantic subsidiary, is reinsuring the annuities on the books of Ameriprise subsidiary RiverSource Life Insurance Co., which will retain account administration and servicing of the policies.

In a reinsurance transaction, one firm contractually accepts the risk of another company. There are several reasons a company might enter into a reinsurance agreement. Ameriprise, for example, is shifting its business mix toward less capital-intensive lines and generated $200 million of deployable capital.

(More: Insurers create pain points for advisers and clients)

Other potential reasons include transferring certain types of risk, such as longevity or investment risk, exiting a certain business line, increasing the profitability of an insurance product, and reducing an insurer's exposure to large claims, according to the Society of Actuaries.

Global Atlantic was the No. 4 seller of fixed annuities last year through the third quarter, having sold $5.6 billion in products over that period, according to Limra, an insurance industry group.

A number of big annuity deals have happened recently.

Great-West Life & Annuity Insurance Co. announced in January it is selling the bulk of its individual annuity and life insurance businesses to Protective Life for roughly $1.2 billion via a reinsurance transaction.

Voya Financial Inc. sold more than $50 billion in annuities to three private-equity firms last year. Those assets are now held by a company called Venerable Holdings Inc.

The Hartford Financial Services Group last year sold about $48 billion in annuity contracts to a group of six investors.

Moody's Investors Services said in a research note late last year that it expects the trend of life insurers selling off legacy blocks of business to continue, given favorable economic conditions such as rising interest rates and a sizable inventory of legacy businesses.

0
Comments

What do you think?

View comments

Most watched

INTV

Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.

INTV

Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

Latest news & opinion

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print