Resolute about growth

In May 2021, Resolution Life Group Holdings announced that it had raised a further $1.6 billion of capital, which it will use to advance its growth strategy through the acquisition and reinsurance of life insurance portfolios.

Since 2018, the company, together with its subsidiaries, has raised approximately $5 billion in capital commitments. Combined with the group’s Bermuda reinsurance base, it now manages $60 billion of assets, employs 1,500 people and provides services to approximately 2.5 million policyholders.

The global manager of in-force life insurance businesses has been busy on the acquisition front. Over the past year, Resolution Life has completed the acquisitions of AMP Life in Australasia for AUD$3 billion ($2.3 billion) and Voya Financial’s $1.25 billion individual life in-force business in the US.

Now, the company has three fully functioning legacy life management platforms in place: Resolution Re, Resolution US and Resolution ANZ. The primary focus now, says Steve Hales, chief executive officer of Resolution Re, the Bermuda-domiciled reinsurance subsidiary of Resolution Life Group, is to build on these platforms.

Resolution US and Resolution ANZ will focus on their home markets, providing capital and operations solutions to their primary industries, says Hales. Resolution Re will focus on reinsurance transactions in several key markets “wherever we believe that we can efficiently free up capital from insurers and honour commitments made to policyholders”.

Hales says: “We pioneered this industry in the UK in the early 2000s and we have seen the market potential expand globally since then. While some markets are more mature than others we see opportunities in the US, Australia and New Zealand, Continental Europe, the UK and Asia.”

Operationally, Resolution Life is committed to a digital transformation strategy which, according to Hales, will make the life insurance group data-driven, artificial intelligence (AI)-enabled and agile.

“We are obsessed with improving customer outcomes. We want to deliver improved digital customer experiences for all operating company processes, control of customer insights and offers, and improve pricing, retention and customer engagement through data-driven analytics and use of advanced AI,” he adds.

Resolution Life has made a large investment on the operations side onshore (US and Australia) and, while it’s still early days, the initial signs indicate the transition is going well. The key to success, says Hales, has been using an agile way of working.

“This allows us to break it down into manageable chunks, empowers people to make decisions and makes people accountable. From the very beginning, it’s been a business project and not just an IT project and we ensured we had buy-in,” he explains.

A desire to de-risk

Resolution Re plans to continue growing the business in select markets, using robust data strategy to build that business without increasing the cost.

“I like to think if we’re successful in a couple of years we will be twice as big as we are now and in more asset classes, with the same team in place and all our processes automated,” says Hales.

“We want to continue growing on a selective basis; we have a robust pipeline, capital to deploy and market conditions are favourable.”

There’s an ongoing desire from the primary industry to de-risk old legacy life portfolios across different markets and different product lines, says Hales, who believes that COVID-19 has accelerated the trend for global life companies to look at restructuring and divesting non-core operations.

“We have seen a marked increase in in-force transactions from Q4 2020, and 2021 is expected to be a significant year for opportunities,” he explains.

“This is definitely not a short-term trend. While interest rates stay so low and the industry goes through the transition to digitise and adapt to consumer habits, the desire to de-risk will be an ongoing trend.

“The US will always be a big open market, but several European and Asian markets are starting to open to insurance consolidation and also to reinsurance solutions for legacy portfolios,” he adds.

From an asset liability perspective, Hales believes there are interesting opportunities in the US and other countries around government fiscal stimulus and “green” industries for long-term asset strategies.

“The right expertise is important and hard to come by, and I believe that we have that with our panel of best-in-class asset managers,” he adds.

While the outlook may be sunny for business, Hales admits it’s a competitive market.

“It’s good for the primary industry as they have some choice on who to interact with and how to do business. There are certain areas in which we can be competitive but others where we can’t,” he says.

Overall, Hayes is confident Resolution Life will succeed. “What we’re doing is quite complex, so we ensure our counterparties understand the process,” he says.

“We’re creating long-term relationships—some of our reinsurance treaties can last 30 or 40 years so we make sure our counterparties and the regulators see the business as sustainable.”

Flexible but robust

The opportunity to have regular interactions with a regulator, in this case the Bermuda Monetary Authority (BMA), is one of the reasons that brought Resolution Re (and many others in the re/insurance industry) to the Island.

“First, the BMA is a flexible but robust regulator. It is used to seeing different risks in life and P&C, and engaging with reinsurers to find sustainable solutions. That is why we came to Bermuda, and our experience to date has confirmed that our initial assumption was correct,” says Hales.

He adds that it’s straightforward to have a conversation with the regulator about a new proposal or way to manage risk.

“We truly value that—the BMA has a very proactive approach. If the proposal doesn’t fit into the standard bucket, they’re happy to talk it through and try to find a way to make it work within the strong regulatory framework,” says Hales.

On a more personal level, Hales—who moved to Bermuda last summer with his family—believes the community on the Island is diverse and knowledgeable.

“There’s definitely more to life on the Island than just pretty beaches,” he says. “The re/insurance community on the Island is cosmopolitan and international. Bermuda is only two hours from New York and six hours from London.

“The time zones are easy to manage and it’s well connected—although I’m not sure that our Australian colleagues would always concur!”

Image: Shutterstock.com/200dgr

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