Blackstone Inc. is joining with Resolution Life in a move that is ultimately expected to give the investment firm more than $60 billion in new assets to manage, executives at both companies said.
Blackstone will invest $500 million in privately held Resolution Life and help it raise roughly $2.5 billion more, giving the insurance company more firepower to acquire new blocks of policies in the reinsurance and life-and-annuities sectors.
Blackstone will manage Resolution Life’s illiquid investments in areas such as private credit, private real estate and asset-based finance. The arrangement will add as much as $25 billion to the private-equity firm’s assets under management in the first year and is expected to contribute a total of more than $60 billion over the next six years.
It is the latest example of a private-equity firm linking up with an insurer to secure more assets to manage and an insurer handing over management of its assets in search of higher returns. It will be the fourth such deal for Blackstone, which has already struck similar partnerships with F&G, part of Fidelity National Financial Inc.; a former life-insurance unit of Allstate Corp.; and Corebridge Financial, the life-insurance and retirement-services unit spun out of American International Group Inc.
Unlike rivals such as Apollo Global Management Inc. and KKR & Co., which have bought all—or a substantial portion of—a single insurance company, Blackstone has opted to take small stakes in a variety of insurers in exchange for agreements to manage their assets. The firm, which will have a roughly 6% stake in Resolution Life after the new capital has been raised, believes the strategy helps it achieve greater scale, according to Gilles Dellaert, global head of Blackstone Insurance Solutions.
“In the credit and lending markets, by virtue of the fact that we manage money for more than one company, we get access to bigger deals on better terms,” he said.
Thanks to its various partnerships, Mr. Dellaert said Blackstone now has a path to managing more than $250 billion in insurance assets over the next five years or so, up from over $150 billion today.
Blackstone, which is slated to report third-quarter earnings next week, managed $941 billion as of the end of the second quarter.
Unlike Blackstone’s other insurance partners, which originate new policies, Resolution Life has a strategy of reinsuring or buying portfolios of pre-existing life-insurance policies from companies that no longer want to be in that line of business.
Founded in 2018, it is the fourth insurance company set up by Resolution Group, whose founder, Clive Cowdery, began buying up these so-called closed blocks of insurance policies two decades ago. Resolution Life has invested $5 billion worth of equity in such deals so far.
The arrangement with Blackstone is the first time one of Mr. Cowdery’s companies has signed such a wide-ranging asset-management agreement with a single firm. He said Resolution Life opted to do so because it liked the structure of the AIG deal and wanted a manager with a deeper understanding of its liabilities.
The private-credit market has also developed significantly over the past several years, creating more opportunities to generate returns that go beyond what publicly traded corporate and government bonds can deliver.
“As an insurance company, I want access for my investors and my policyholders to that spread,” Mr. Cowdery said.
This story has been published from a wire agency feed without modifications to the text