AllianceBernstein is investing in a Reinsurance Group of America sidecar vehicle, in line with its strategy of partnering with industry heavyweights to take its insurance asset management business - already 25% of AB’s total assets under management - to the next level.
Onur Erzan, the head of AB’s global client group and its Bernstein private wealth business, said AB’s investment in RGA’s Ruby Reinsurance Company will boost the firm’s exposure to fast-growing “asset intensive” market opportunities, such as pension risk transfers, which focus on spread risks as opposed to mortality risks.
By investing into that RGA sidecar, “we are also investing in our strategic relationship with RGA,” Erzan explained. That, in turn, will open up broader ways for AB to partner with RGA, including managing balance sheet assets for RGA in alternatives market segments such as private credit, he said.
RGA reported $4 trillion in life reinsurance in force and assets of $120.3 billion as of Sept. 30.
Neil Jain, AB’s head of strategy, said RGA’s appetite for scaled exposures to illiquid assets with attractive risk return profiles make that firm “a strong partner for AB,” with opportunities for the Nashville-headquartered manager to broaden its business in the fast-growing “asset intensive” insurance sector.
RGA, in a Nov. 13 announcement, said AB had participated in a second round of capital commitments to Ruby Reinsurance, which lifted total funding for the sidecar vehicle since its launch last year to $480 million.
Erzan said AB was the only lead investor in the second funding round, with the firm slated to appoint a member to Ruby Re’s board of directors.
Erzan said further details will only emerge as contracts are hammered out as the deal is finalized over the coming quarters. “As we have all the terms ironed out when it comes to the different investment management agreements, obviously it will flow through our financial statements,” he said.
At the end of the day, “we see a big opportunity in the insurance space (and are) excited about the ability to manage assets for RGA in private credit,” said Erzan.
The deal, the firm’s first investment in a reinsurance sidecar vehicle, is part of AB’s broader goal of becoming “a preferred partner to large insurance and reinsurance clients, not only domestically but on a global basis,” Erzan said.
Over the past few years, AB – 61% owned by insurance company Equitable Holdings – has brought all of its insurance asset management capabilities “under one roof” to better pursue third-party business, hiring industry veteran Geoff Cornell in May as the first chief investment officer of the firm’s newly established insurance asset management vertical.
