American Financial Group, Inc. Announces Block Reinsurance Agreement With Global Atlantic; Expected to Result in $375 Million to $400 Million of Additional Excess Capital at AFG

Nachrichtenquelle: Business Wire (engl.)
26.10.2020, 21:40  |  130   |   |   

American Financial Group, Inc. (NYSE:AFG) announced today that it has entered into a reinsurance agreement with Commonwealth Annuity and Life Insurance Company (“Commonwealth”), a subsidiary of Global Atlantic Financial Group Limited (“Global Atlantic”). Through its subsidiaries, Global Atlantic offers a broad range of retirement, life and reinsurance products, and is rated “A” by A.M. Best.

Under the terms of the agreement, AFG’s Annuity subsidiary, Great American Life Insurance Company (“GALIC”), ceded approximately $5.7 billion (statutory basis) of inforce traditional fixed and indexed annuities, representing approximately 15% of its inforce business, and transferred related investment assets to Commonwealth.

The agreement has an effective date of October 1, 2020 and will be reported in AFG’s fourth quarter financial statements. Information on the assets and reserves ceded is as follows:

GAAP book value (amortized cost) of assets transferred:

Bonds

 

$5.1 billion

Cash

 

$0.6 billion

Total

 

$5.7 billion

 

 

 

Book yield on bonds transferred

 

3.13%

Average NAIC rating of bonds transferred

 

1.4

 

 

 

GAAP carrying value of ceded reserves:

Indexed annuities

 

$5.3 billion

Traditional fixed annuities

 

$0.7 billion

Total

 

$6.0 billion

Because the assets transferred under the agreement have a lower average yield than AFG’s overall annuity portfolio yield, and the policies ceded have an overall cost of funds that is higher than that of AFG’s retained business, AFG expects to earn an increase in the net interest spread on its retained $34 billion of annuity reserves.

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American Financial Group, Inc. Announces Block Reinsurance Agreement With Global Atlantic; Expected to Result in $375 Million to $400 Million of Additional Excess Capital at AFG American Financial Group, Inc. (NYSE:AFG) announced today that it has entered into a reinsurance agreement with Commonwealth Annuity and Life Insurance Company (“Commonwealth”), a subsidiary of Global Atlantic Financial Group Limited (“Global …

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