Ameriprise Makes $8 Billion Fixed Annuity Deal With Global Atlantic

June 29, 2021

What You Need to Know

  • New York regulators have to approve the New York portion of the deal.
  • An Ameriprise company would continue to administer and service the annuities.
  • The deal should free $700 million in excess capital.

Subsidiaries of Global Atlantic Financial Group have agreed to reinsure an $8 billion block of fixed annuities for Ameriprise Financial Inc.

The deal could help Ameriprise make good on promises it has made to investors — to assume less insurance and investment risk, lock up less capital, and generate more of its revenue from managing assets and selling insurance written by other organizations.

Ameriprise has a strategy that calls for “driving growth through our lower-capital, fee-based businesses and freeing up capital to generate shareholder value,” Jim Cracchiolo, the CEO of the Minneapolis-based financial services company, said in a comment on the deal.

Deal Nuts and Bolts

The block of annuities involved in the deal includes traditional fixed-rate deferred annuities, non-variable indexed annuities, and income annuities written by two Ameriprise life insurance subsidiaries, RiverSource Life Insurance Company and RiverSource Life Insurance Co. of New York.

The Global Atlantic subsidiaries providing the reinsurance would be Commonwealth Annuity and Life Insurance Company and First Allmerica Financial Life Insurance Company.

Global Atlantic and Ameriprise can complete the Commonwealth Annuity-RiverSource Life Insurance Company deal without getting approvals from state insurance regulators, and they hope to close on that transaction in July.

The companies need approval from New York state regulators for the First Allmerica-RiverSource Life of New York deal. Global Atlantic and Ameriprise have not estimated a completion date for the New York state transaction.

Ameriprise said RiverSource Life would continue to administer and service the annuities involved in the deal.

Global Atlantic has reinsured a total of about $60 billion in life and annuity business since it came to life, in 2004.

The company reinsured $1.7 billion in fixed annuities for Ameriprise in 2019.