Equitable Holdings Reinsures $12 Billion Legacy Variable Annuity Block to Venerable Holdings

November 3, 2020

Willkie represented Equitable in the landmark transaction, which accelerates capital return for the company.

On October 27, Equitable Holdings, Inc. (NYSE: EQH) announced that it entered into an agreement with Venerable Holdings, Inc. to reinsure a block of legacy variable annuity policies sold between 2006-2008 backed by approximately $12 billion, based on estimates as of June 30, 2020, of general account assets and to select AllianceBernstein as the preferred investment manager for the assets. As part of the transaction, Equitable will also sell its runoff variable annuity reinsurance entity, Corporate Solutions Life Re.

The transaction will generate approximately $1.2 billion, based on estimates as of June 30, 2020, of value for Equitable Holdings on a statutory basis, which includes an expected $800 million capital release, a positive ceding commission and consideration for Corporate Solutions Life Re totaling approximately $300 million subject to adjustment, and approximately $100 million in tax benefits. Importantly, the transaction accelerates the company’s strategic actions to de-risk its balance sheet and shift towards less capital-intensive businesses.

Under the terms of the agreement, Venerable’s reinsurance obligations will be secured by a comfort trust with an expected initial balance of approximately $12 billion of assets. AB will serve as the preferred investment manager for c. 80%4 of the general account assets transferred. Equitable will continue to administer the policies.

Equitable Holdings, Inc. is a financial services holding company comprised of two complementary and well-established principal franchises, Equitable and AllianceBernstein. Founded in 1859, Equitable provides advice, protection and retirement strategies to individuals, families and small businesses. AllianceBernstein is a global investment management firm that offers research and diversified investment services to institutional investors, individuals and private wealth clients in global markets. Equitable Holdings has approximately 12,000 employees and financial professionals and $711 billion in assets under management (as of 6/30/2020).

Founded in 2018, Venerable owns and manages legacy annuity business acquired from other entities. It is a business with well-established, strategic investors, experienced in successfully building and growing insurance businesses with long-term capital.

The Willkie team was led by partners John Schwolsky, Elizabeth Bannigan and Howard Block, and included partner Christopher Peters and counsel Christopher Petito.