Canada Pension Plan Investment Board, the nation’s largest pension fund manager, agreed to buy Wilton Re Holdings Ltd. for $1.8 billion to expand into the life insurance business.
The reinsurer is being acquired from investors including Stone Point Capital and Kelso & Co., the Toronto-based fund manager said today in a statement. The purchase is Canada Pension’s first direct investment in the insurance sector.
Wilton is “an ideal platform through whichCPPIBcan deploy significant follow-on capital at scale in the U.S. life insurance sector,” Andre Bourbonnais, senior vice president of private investments at the pension fund, said in the statement.
Reinsurance is attractive for pension funds as they seek long-term cash to match their liabilities. Reinsurers have found opportunities in recent years as carriers seek to simplify operations and limit risks tied to policies sold in the past, as low interest rates pressure returns.
Bermuda-based Wilton Re struck deals this year to take on liabilities from CNO Financial Group Inc. and CNA Financial Corp., the insurer controlled by Loews Corp. Wilton Re, run by ex-Swiss Re Ltd. executive Chris Stroup, won backing in 2004 from investors including insurance broker Marsh & McLennan Cos., and Vestar Capital Partners.
This is Canada Pension’s largest public acquisition since it led a consortium to purchase Neiman Marcus Group Ltd. last year. Canada Pension manages C$201.5 billion ($179 billion) for 18 million Canadians excluding the province of Quebec.