Prudential Financial Inc. and Warburg Pincus are among investors that contributed a combined $1 billion of equity to create a Bermuda-based reinsurer, Prismic Life Reinsurance Ltd.
In its first deal, Prismic is taking on $10 billion of structured settlement annuity contracts from Prudential, freeing up capital for it to write new insurance business. The transaction is subject to regulatory approvals.
Initially, Prudential will own 20% of the new firm, with Warburg controlling a 15% stake, according to an emailed statement. Nomura Holdings Inc. said it's among global investors owning the remaining equity.
Prismic's founding allows Prudential to unload assets with longer durations that are less valued by public markets, such as variable annuities and guaranteed universal life insurance policies, Prudential Vice Chair Rob Falzon said in an interview.
Prudential sees opportunities to manage assets for other insurers and to grow its business of providing flow reinsurance, including pension-risk transfer deals, and third-party insurance, Falzon said.
The pension-risk transfer market in the U.S. grew to about $50 billion of deals last year as firms sought to offload their defined-benefit pension obligations.
"I'm not sure anyone has the kind of scale and brand that we bring," said Falzon, whose employer had about $1.4 trillion of assets under management as of midyear.
