How Sixth Street Laid the Groundwork for Its Massive Allianz Deal

Wagering that the wave of保险赔率will continue, $55 billion investment manager Sixth Street is positioning itself to take advantage.

On Friday, Allianz Lifeannouncedthat it had entered into a massive reinsurance agreement with Sixth Street’s portfolio companyTalcott和合作伙伴解决生活, Sixth Street’s second big insurance deal of the year.

Pending the deal’s close, the two will reinsure roughly $35 billion in Allianz Life’s fixed indexed annuity liabilities. Allianz Life will continue to manage the insurance policies, and Allianz and PIMCO will remain the primary asset managers, according to the announcement. Talcott and Resolution Life will access the policyholders’ fee streams as a form of ongoing revenue.

Sixth Street is poised to complete similar deals moving forward.

六街开始大约五年前开始探索保险业务，一定要给自己足够的时间来充分了解行业的复杂性。“我们必须了解该事业，在监管框架内工作，了解如何留意保单持有人，”六街联合创始人和合作伙伴在一个电话中Institutional Investor.

Sixth Street started small, completing a series of life insurance deals in the Netherlands, including one with Allianz. In 2020, one of Sixth Street’s portfolio companies, Lifetri Groep, took over the pension obligations of roughly 4,000 participants in Allianz’s Dutch pension scheme, Stichting Pensioenfonds Allianz Nederland Groep.

Through that deal, the two became familiar, and as Allianz began to consider a larger deal for its life insurance business, the two firms stayed in touch. Allianz ran an official process, so while Sixth Street was certainly in play, the private equity firm wasn’t the only buyer that Allianz considered.

“The familiarity with the two organizations was helpful going into the process,” Muscolino said.

与此同时，第六街正在建立自己的保险能力，增加了一支保险专家团队，今天总计20人，其中一些人被招募了瑞士重复和公平等组织。

Sixth Street alsoacquiredTalcott Resolution Life Insurance, a company that would serve as a platform for its future insurance deals. As part of the deal, which was announced in January, Sixth Street used its Tao investment platform to purchase the company from a consortium of investors, which included Cornell Capital, Atlas Merchant Capital, TRB Advisors, Global Atlantic Financial Group, Pine Brook, J. Safra Group, and the Hartford.

“One thing that was important to us [when] acquiring Talcott was [getting] a platform with a big group of talented people with systems and abilities to act,” Muscolino said.

Both deals have come at a time when insurers are eager to sell. Persistently low interest rates are “likely to affect growth and profitability” in annuities and other non-term life insurance products, which could prompt insurance companies to divest, according to an M&A outlook report published bydeloite.earlier this year. For private equity firms, meanwhile, insurance policies are seen as high-quality, less risky assets.

Five days after Sixth Street announced it would acquire Talcott, Blackstoneannouncedthat it planned to acquire Allstate Life Insurance Company. Less than two weeks later, KKRrevealed它收购了固定利率和固定年金提供商全球大西洋金融集团已关闭。一个月后，阿波罗announced其官方合并r with annuity provider Athene.

The structures of the deals lay bare two disparate approaches that private equity firms are taking when they acquire insurance businesses or do reinsurance deals. KKR and Apollo have opted to move the insurance assets onto their respective balance sheets, while Blackstone and Sixth Street acquired these companies through funds.

在第六街的案例中，该基金是陶车，持有超过传统私募股权基金的资产，并允许投资者在车辆中回收资本。

Pending the deal closure, Allianz’s fixed indexed annuity liabilities will be held by Talcott, while Allianz will continue to manage the policies on behalf of clients.

“We're focused on getting this deal closed by year-end, and we hope and expect that there will be more opportunities for fruitful deals,” said Muscolino.