MetLife (MET.N) and General Atlantic are set to form a groundbreaking reinsurance venture, Chariot Reinsurance, the companies announced on Wednesday. This partnership reflects a growing trend of collaboration between insurers and alternative money managers to optimize returns on low-risk insurance assets.
The new entity will be based in Bermuda and is scheduled to launch in the first half of 2025. Chariot Reinsurance will start with an equity contribution of over $1 billion, with MetLife and General Atlantic each holding approximately 15% ownership stakes.
Leadership and Initial Funding
Chariot Reinsurance will be led by Cynthia Smith, formerly the head of MetLife’s group benefits regional business. The venture will be seeded with $10 billion worth of existing MetLife policies. Additionally, Chubb (CB.BN), another leading insurance firm, will serve as an anchor investor, while institutional investors are in the process of committing funds.
Graves Tompkins, Chief Operating Officer of General Atlantic, emphasized the alignment between MetLife’s high-quality, long-duration liabilities and General Atlantic’s investment strategy. “This venture enables us to create value over the long term without taking on principal risk,” he said.
Industry Trends and Strategic Objectives
This initiative highlights the increasing overlap between the insurance and asset management industries. Insurers, like MetLife, are seeking to free up capital by transferring existing policies off their balance sheets, allowing for investments in new products. Simultaneously, alternative asset managers benefit from the steady cash flow that insurance policies provide, using these funds to pursue higher-yielding strategies.
Both MetLife and General Atlantic, through their respective investment management arms, will oversee the assets within Chariot Re. Future assets may include additional MetLife policies, as well as acquisitions from the pension risk transfer market. This market is gaining traction as corporations offload retirement plan management to cut costs and streamline operations.
Addressing Growth and Capital Constraints
MetLife’s Chief Financial Officer, John McCallion, noted the significance of securing external capital to support the venture’s potential growth. “This partnership stems from the growth opportunities we see in our business. However, we recognize that we cannot rely solely on our balance sheet to finance all of it,” McCallion explained.
Chariot Re is poised to become a major player in the life and annuity reinsurance sector, leveraging the expertise and resources of both MetLife and General Atlantic. The collaboration underscores a broader shift in the financial ecosystem, as traditional insurance firms increasingly partner with asset managers to unlock value and drive innovation.
Implications for the Market
The launch of Chariot Re marks a significant milestone in the convergence of the insurance and investment management industries. It sets the stage for further partnerships aimed at capital efficiency and enhanced returns, reshaping the way insurers and asset managers collaborate in the future.
