Reinsurance Group of America (RGA), a global life and health reinsurer, has launched Ruby Reinsurance Company (Ruby Re), a Missouri-domiciled third-party life reinsurance company targeting US asset-intensive business.

According to the announcement, Ruby Re has closed its first round of funding and secured equity capital commitments from lead investors Golub Capital, Hudson Structured Capital Management Ltd. (doing its re/insurance business as HSCM Bermuda), and Sammons Financial Group.

From what we understand, Ruby Re will reinsure business from RGA and will not face clients directly.

Initially, RGA will retrocede a block of $2.5 billion of existing liabilities to Ruby Re, and Ruby Re will then automatically receive a quota share from RGA of all future qualifying business. However, this is subject to certain conditions, such as meeting underwriting standards and regulatory approvals.

Golub Capital, one of the lead investors, has strategically partnered with RGA on a number of projects in the past, with over $1 billion invested or committed across multiple products.

Golub Capital has provided investment solutions to RGA since 2010 across an array of products. The transaction with RGA is a culmination of a valuable long-term partnership, as well as a shared investment approach and a strategic growth opportunity for both firms.

At the same time, the lead investment in Ruby Re also marks Golub Capital’s inaugural insurance capital sidecar transaction.

Gregory Robbins, Vice Chair of Golub Capital, said: “While we have an established track record of providing capital efficient investment solutions to insurance companies, this expanded partnership with RGA marks a foundational milestone for Golub Capital as a provider of strategic capital to our insurance partners. We view capital solutions as an important avenue of future partnership with insurance company clients alongside our longstanding investment and capital efficient structuring capabilities. This transaction provides a replicable model for similar opportunities in the future.”

Leslie Barbi, Executive Vice President and Chief Investment Officer, RGA, commented: “Golub Capital has been a trusted strategic partner for RGA, delivering excellent investment returns over many years. This investment is another example of our growing relationship, supporting creative insurance solutions.”

In addition, Jefferies acted as financial advisor and Oliver Wyman provided actuarial support.

Latham & Watkins acted as legal advisors to RGA and Sidley Austin were legal advisors to the lead investors. Additional terms are not being disclosed at this time.

Tony Cheng, President, RGA, commented: “As a pioneer in the asset-intensive business, I am excited about the next step in our continuing support for this growing market segment. Ruby Re provides RGA with alternative capital that expands our capacity at attractive terms benefiting our clients, shareholders, and Ruby investors.”

Robbins, added: “This is Golub Capital’s inaugural insurance capital sidecar transaction and is a culmination of a shared investment approach and valuable partnership with RGA since 2010. We are delighted to be able to leverage our financing capabilities to support RGA’s continued growth.”

Gokul Sudarsana, Managing Director and Chief Actuary, HSCM Bermuda, added: “We are excited to be partnering with RGA. The combined capabilities of Ruby Re, along with RGA’s outstanding reputation and underwriting, will allow us to quickly establish a dynamic new platform in the fast-growing asset-intensive market.”

Esfand Dinshaw, Sammons Financial Group Chief Executive Officer, commented: “For decades, we have recognized RGA as one of our trusted partners and are excited to be a lead investor in Ruby Re. We are proud to continue to build upon our strong relationship in support of our long-term growth strategy.”