International life and annuity insurance specialist Talcott Financial Group (Talcott) has announced the launch of West Grove Re Ltd., a Bermuda based reinsurance sidecar structure that has been capitalised with approximately $1 billion after a fund-raise in partnership with Goldman Sachs.
The reinsurance sidecar will participate in a quota share of some of the Talcott-sourced U.S. annuity business.
The sidecar structure has been designed to “enhance Talcott’s ability to deliver scalable, capital-efficient solutions to its stakeholders across a wide set of liabilities,” the company explained.
In addition, Talcott noted that the West Grove Re reinsurance sidecar will also benefit from its underwriting and risk management approach and insurance expertise.
Talcott will provide support services to the reinsurance sidecar across a range of functions, including actuarial, finance, compliance, and risk.
Goldman Sachs Asset & Wealth Management will act as the investment manager for private asset strategies for the asset portfolio of the West Grove Re sidecar, while other asset managers are expected to manage the rest of the sidecar’s assets.
The roughly $1 billion capital raise for West Grove Re includes equity commitments from Talcott, Goldman Sachs Asset & Wealth Management (AWM) and its clients, as well as a credit facility, Talcott further explained.
“Establishing West Grove Re is another important step in Talcott’s growth strategy, broadening our access to liabilities with varied costs of capital, while staying true to the strength of our platform as we continue to scale,” explained Imran Siddiqui, Chief Executive Officer of Talcott. “Partnering with Goldman Sachs further validates the business we have been building since Sixth Street’s acquisition in 2021. By pairing our deep insurance expertise with Goldman’s access to client capital and private asset origination franchise, we are enhancing our ability to support the evolving needs of our partners and the broader insurance market.”
“We are excited to invest alongside Talcott and our clients in this solution for the insurance marketplace. Our private credit business will bring a rigorous credit selection process, access to a deep sourcing and origination funnel through our investment bank, and our expertise in markets and risk management to this partnership,” added Vivek Bantwal, Global Co-Head of Private Credit at Goldman Sachs Alternatives.
Talcott becomes the latest major life and annuity player to launch a reinsurance sidecar, to bring third-party capital to support its business.
As we reported earlier this week, rating agency AM Best had said that strong U.S. annuity sales have driven a surge in reinsurance sidecar formations in recent years, resulting in rising premiums being ceded to the third-party capitalised structures.
Life and annuity specialists are utilising the reinsurance sidecar structure to bring efficient third-party capital from investors to support their businesses and fund growth, while also recognising that the investment strategy can evolve in partnership with specialists to further enhance performance of the subject business.
You can read all about the many reinsurance sidecar investments and transactions over the history of the ILS market, by visiting our comprehensive list of collateralized reinsurance sidecars transactions.
