January 31, 2022
Sixth Street Announces $25 Billion Reinsurance Transaction between an Affiliate of Talcott Resolution and Principal Financial Group
San Francisco, CA, January 31, 2022 – Sixth Street, a leading global investment firm, today announced the signing of a reinsurance transaction between a non-U.S. affiliate of Talcott Resolution (“Talcott”) and Principal Financial Group®. The transaction is expected to close in the second quarter of 2022, subject to customary closing conditions.
Under the terms of the transaction, the Talcott affiliate will reinsure approximately $25 billion of liabilities, comprised of $16 billion and $9 billion of retail fixed annuity and secondary guarantee universal life insurance liabilities, respectively, from Principal®. Principal® will continue to service and administer the policies of the reinsured blocks of business.
This is the fourth business development transaction for Talcott and its affiliates since Talcott’s acquisition by Sixth Street in July 2021. With this deal, the platform further advances its position as a premier risk partner for the life and annuity marketplace, having reinsured approximately $46 billion in liabilities since the acquisition. Upon the closing of the transaction, Talcott and its affiliates will manage $140 billion in liabilities and surplus on a pro-forma basis as of September 30, 2021.
“The Talcott team continues to affirm our original investment thesis: this platform, with its the broad capabilities and deep expertise, can realize its significant growth potential as the premier strategic partner to the insurance industry,” said A. Michael Muscolino, Co-Founder and Partner at Sixth Street. “We were pleased to work with the Principal team to create this solution, and we look forward to Talcott continuing to successfully execute on its plans for growth and diversification.”
This transaction further strengthens Talcott’s position as one of the leading life and annuity consolidators and increases the scale and diversification of assets and liabilities managed across Talcott and its affiliates. Upon close and including 2021 transactions, fixed and payout annuity business will increase from $8 billion at September 30, 2021 to $45 billion on a pro-forma basis, and universal life insurance liabilities will be added to the existing product profile, which also includes variable annuity and private placement life insurance. Additionally, general account assets will have grown more than fourfold from $15 billion at September 30, 2021 to approximately $64 billion on a pro-forma basis.
J.P. Morgan Securities LLC and PJT Partners served as financial advisors and Willkie Farr & Gallagher LLP served as legal advisor for this transaction.
About Sixth Street
Sixth Street is a global investment firm with over $60 billion in assets under management. The firm uses its long-term flexible capital, data-enabled capabilities, and One Team culture to develop themes and offer solutions to companies across all stages of growth. Sixth Street invests in and offers solutions to companies in the insurance and reinsurance industry through its dedicated insurance affiliates as well as its $25 billion Sixth Street TAO platform. Founded in 2009, Sixth Street has more than 350 team members including over 180 investment professionals operating from around the world. For more information, visit www.sixthstreet.com, follow us on LinkedIn, or on Twitter @SixthStreetNews.