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Equitable strikes new reinsurance deal with RGA

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RGA deal to unlock more than $2 billion of capital for

Equitable

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Equitable to launch tender offer for some

AllianceBernstein ( AB )

units

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Insurer also plans $500 million of new share repurchases

By David French

Feb 24 (Reuters) - Equitable Holdings ( EQH ) will

announce on Monday it aims to raise its stake in money manager

AllianceBernstein Holding ( AB ) after striking a new

reinsurance deal that will unlock more than $2 billion of cash,

the insurer's executives said.

The moves will help Equitable double down on higher growth

businesses such as asset management.

Equitable will unveil later on Monday that about 75% of its

in-force individual life business is being reinsured by

Reinsurance Group of America ( RGA ). The block consists of

active policies where policyholders pay premiums periodically.

The capital released by the reinsurance deal will be used to

support Equitable's tender offer to purchase up to 46 million

units of AllianceBernstein ( AB ), which could be worth as much as $1.8

billion. New York-based Equitable will offer $38.50 per unit,

representing a 7.8% premium to Friday's closing price.

If the tender offer is successful, the deal will help

Equitable - which already controls about 62% of

AllianceBernstein ( AB ) - boost its holding in the company to as much

as 77.5%.

The RGA transaction will also help Equitable fund $500

million of incremental share repurchases on top of existing

buyback programs.

"With this freed-up capital, we have the opportunity to

really support our growth strategy, and where we're really

focusing on, which is retirement, wealth management and asset

management," Mark Pearson, CEO of Equitable, told Reuters.

Should Equitable's tender offer be fully taken up by

AllianceBernstein ( AB ) unitholders, Equitable would generate roughly

60% of its cash flow from asset management, compared to about

17% when it was spun out of French insurer AXA in

2018, Pearson added.

The RGA transaction is the latest in a series of deals that

have been struck in recent years by insurers to reinsure or

divest books of existing business to free up capital. This

includes Equitable's sale in 2020 of certain run-off and

closed-block businesses to Heritage Life Insurance Company.

Moreover, the insurance and asset management industries have

been increasingly converging, as financial services firms

attempt to combine complementary capabilities to boost earnings.

Having an integrated insurance and money-manager model

allows Equitable to benefit financially through the life of a

product, from distribution fees earned when selling it at the

beginning, to fees from managing the assets through time,

according to Equitable's finance chief Robin Raju.

(Reporting by David French in New York; Editing by Anirban Sen

and Muralikumar Anantharaman)