MassMutual helps form a Bermuda reinsurer and sends it $14 billion in business

What do you want to know

  • Barings, a subsidiary of MassMutual, and Centerbridge will manage the assets of Martello Re.
  • Brown Brothers Harriman announced in December that its new Martello Re Series offering raised $410 million from 754 investors.
  • MassMutual gave no details of the company to be reinsured.

Massachusetts Mutual Life Insurance worked with two outside investment firms – Centerbridge Partners and Brown Brothers Harriman — to launch Martello Re Ltd., a major life and annuity reinsurer.

MassMutual announced Wednesday that it will reinsure $14 billion in general account liabilities with Hamilton, Bermuda-based Martello Re. MassMutual ended the third quarter of 2021 with approximately $208 billion in general account liabilities.

MassMutual did not specify how much of the reinsured business with Martello Re will be annuities, how much will be life insurance and how much will be other types of business.

What the deal means

For MassMutual, the deal could help free up capital by bringing certain companies under the jurisdiction of the Bermuda Monetary Authority.

Traditionally, US life insurers have invested most of their trillions of dollars in reserves in high quality corporate bonds. In recent years, due to the effects of low interest rates on bond yields, they have invested more money in arrangements that US insurance regulators consider alternative investments, such as private equity transactions, real estate bonds and long-term infrastructure.

One of the benefits of running a life insurance business in Bermuda is that it provides more generous treatment of alternative assets, such as private equity investments, when calculating the capital ratio based on the risk of a life insurer.

For life insurance agents and policyholders, the Martello Re arrangement could mean MassMutual will be in a better position to maintain benefits and contain price increases, despite the effects of low interest rates on portfolio returns corporate bond and high COVID-19 life insurance and disability insurance claims.

The players

MassMutual is a Springfield, Massachusetts-based life insurer that was founded in 1851. It is organized as a mutual insurer, meaning it is owned by its policyholders. It is the parent company of Barings, a Charlotte, North Carolina-based investment manager that was founded in 1762 and manages $387 billion in assets.

Center bridge is a New York-based investment firm that was founded in 2005 and manages approximately $33 billion in capital.

Brown Harriman Brothers is a New York-based investment firm founded in 1818 that holds $5.4 trillion in assets under custody.

The Martello Re Affair

MassMutual’s Barings unit issued the press release announcing the birth of Martello Re.

Barings has said so and Centerbridge will help by managing the assets of Martello Re.

MassMutual, Centerbridge, Brown Brothers Harriman and a group of institutional investors and family offices, including Hudson Structured Capital Management, have raised a total of $1.65 billion in capital for Martello Re.

Brown Brothers Harriman’s Wealth Strategies unit raised $410 million for the new reinsurer from 754 investors in late 2021 through a mutual fund interest offering, according to a report the company has. filed in December with the SEC.

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