Corebridge Financial has entered into an agreement with CS Life Re, a subsidiary of Venerable Holdings, to reinsure all the variable annuities of its Individual Retirement business.
Explained, Venerable is set to reinsure approximately $51 billion of variable annuity business from Corebridge’s insurance subsidiaries American General Life Insurance Company (AGL) and The US Life Insurance Company in the City of New York (USL).
The $51 billion of total account value includes $5 billion of General Account AV (reinsured 100% on a coinsurance basis) and $46 billion of Separate Account AV (reinsured on a modified coinsurance basis).
New variable annuity contracts written through the Individual Retirement business and issued by AGL will be reinsured through an ongoing flow reinsurance agreement that will begin once the transaction is closed.
This will reportedly expand Venerable’s existing growth strategy by offering cedents the ability to focus on delivering a full suite of retirement products to their distributors and end clients in a capital-efficient manner.
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Additionally, Venerable will acquire Corebridge’s investment adviser, SunAmerica Asset Management, LLC.
According to Corebridge, the transaction is valued at $2.8 billion, consisting of both ceding commission and capital release, and will generate approximately $2.1 billion of net distributable proceeds after tax for it.
Meanwhile, Venerable said the deal will increase its total assets under risk management, on a pro forma basis as of March 31, 2025, by approximately 77% from $67 billion to $118 billion.
Kevin Hogan, President and Chief Executive Officer of Corebridge, commented, “This is a transformative transaction that repositions the company by exiting Individual Retirement variable annuities.
“This transaction delivers significant value for Corebridge and its shareholders. We are reaffirming our financial targets while reducing risk and maintaining our diversified business model.
“We expect to use the proceeds to accelerate our capital management objectives, including a substantial majority returned via share repurchases, with the remainder to support organic growth. Our Board of Directors approved a $2 billion increase to our share repurchase authorization in connection with this transaction.
“We are pleased to partner with Venerable on this transaction given their deep expertise and leadership in the variable annuity reinsurance business.”
David Marcinek, Chairman and CEO of Venerable, noted, “Today’s announcement affirms Venerable as the partner of choice in the variable annuity risk transfer space and advances aspirations to expand our growth strategy to include variable annuity flow reinsurance.
“The efficient and effective standup of Venerable Advisers additionally allowed us to offer Corebridge solutions that others in the industry could not, including expertise in managing separate account assets.
“The expertise and capabilities across the whole of our company, combined with our risk management philosophy and robust capital position, will position us well for continued disciplined growth.”
In response to the news of this deal arising, analysts from KBRA have shared their views, noting that the transaction is representative of Venerable’s ongoing ability to source, diligence, and negotiate opportunities that support its business strategy of being the partner of choice for variable annuity risk transfer.
“KBRA expects that Venerable will apply its extensive experience closing, onboarding and managing the process of acquiring variable annuity exposure to successfully execute the current transaction. KBRA further expects that upon closing the company will, among other things, meet or exceed management’s regulatory capital and financial leverage targets. KBRA will continue to monitor the situation,” KBRA added.
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