Allianz Teams Up with PIMCO to Launch Sconset Re Life Reinsurance Sidecar with Institutional Backing

Global insurance leader Allianz has launched a life and annuity-focused reinsurance sidecar, Sconset Re Ltd., with institutional investor support to fund the structure. The initiative also includes collaboration with PIMCO and other institutions for asset management expertise.

Bermuda-based Sconset Re Ltd. will initially assume a $4 billion portfolio of fixed index annuity risk from Allianz via a reinsurance arrangement. Additionally, it has entered a forward flow agreement to reinsure a further $5 billion to $10 billion of new life insurance annuity-related risks over time.

Specialising in indexed annuity risks, Sconset Re will also prioritise asset management. Investment manager PIMCO is expected to handle the majority of the investment portfolio, focusing on optimising returns.

Allianz's strategy aims to attract institutional backing to expand its U.S. life insurance business, enhancing the performance of substantial annuity portfolios. By transferring these portfolios off its balance sheet and using third-party reinsurance capital, Allianz leverages PIMCO’s and others’ investment expertise to increase value and returns.

The sidecar’s capitalisation includes investments from institutions such as Voya and Antares, who will also manage parts of the portfolio. Deutsche Bank acted as financial advisor for the transaction and arranged a debt financing facility for Sconset Re.

Deutsche Bank highlighted Allianz's view of the Sconset Re initiative as a strategic step in expanding its U.S. life and asset management operations.

Life reinsurance sidecars are becoming increasingly significant globally, with many major insurers adopting them to meet the growing demand for insurance-linked investment opportunities and to strengthen asset management partnerships.