April 25, 2024

Prudential Financial closes transaction with Somerset Re

US insurance and investment firm, Prudential Financial, Inc. has successfully completed a major reinsurance transaction with Somerset Re involving a portion of its guaranteed universal life insurance block.

prudentialThe transaction, previously announced in July 2023, includes $12.5 billion of reserves backing Prudential’s guaranteed universal life policies issued by Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey.

The policies covered by this transaction were written before 2015, making up approximately one-third of Prudential’s total guaranteed universal life statutory reserves.

Jeff Burt, Chairman and Chief Executive Officer of Somerset, commented: “Closing our third transaction with Prudential extends both Somerset’s track record of providing superior risk management solutions for asset-intensive liabilities and the long-time relationship between our companies.

“Somerset looks forward to building on that relationship and delivering exceptional service going forward.”

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Charles Lowrey, Chairman and CEO of Prudential Financial, emphasised that the deal is a significant milestone in the company’s efforts to reduce market sensitivity and enhance capital flexibility.

The company expects that the reinsurance deal will not only help in managing its exposure to market fluctuations but also boost its financial resilience.

Upon closing, Prudential expects a post-tax annual adjusted operating income increase of approximately $55 million, along with the amortisation of the cost or benefit of reinsurance, which is expected to be accretive to earnings.

However, the final details will be concluded during the closing period.

Wells Fargo Securities, LLC served as exclusive financial advisor and Willkie Farr & Gallagher LLP served as legal counsel to Prudential for the transaction.

RBC Capital Markets served as financial advisor and Mayer Brown LLP served as legal counsel to Somerset Re for the transaction.

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