Bermudian-based Somerset Reinsurance has reached a third reinsurance agreement with Prudential Financial, the US-headquartered Fortune 500 company.

Making the announcement, Prudential said it has agreed to reinsure a portion of its guaranteed universal life block with Somerset Re.

Prudential said the deal will result in approximately $450 million of proceeds, including approximately $425 million of capital that supports the block. Proceeds are subject to customary adjustments at closing, it added.

Under the agreement, Prudential said, Somerset Re will reinsure approximately $12.5 billion of reserves backing Prudential’s guaranteed universal life policies issued by Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey.

This transaction, covering policies written before 2015, represents approximately one third of Prudential’s total guaranteed universal life statutory reserves, the company said.

“This transaction marks another significant milestone in our efforts to reduce market sensitivity and increase capital flexibility,” said Charles Lowrey, chairman and chief executive of Prudential Financial.

“We remain committed to offering a comprehensive and attractive portfolio of life insurance solutions to meet the diverse needs of our customers.”

Jeffrey Burt, chairman and CEO of Somerset Re Group, said: “Somerset Re is pleased to expand its risk-management support for Prudential Financial in this transaction.

“This represents our third reinsurance agreement with Prudential, demonstrating the breadth of solutions Somerset Re is bringing to its business partners.”

The reinsurance transaction is structured on a modified coinsurance basis and contains significant structural protections, including over collateralisation and investment guidelines, Prudential said.

The transaction is expected to close in the fourth quarter of 2023, subject to regulatory approval, including by the Bermuda Monetary Authority.

Somerset Re is a provider of reinsurance solutions for asset-intensive life insurance and annuity business, helping its clients to manage capital efficiency and improve their financial results.

Ceding companies ranked Somerset No 1 in the Business Capability Index, as measured by NMG Consulting’s 2021 US Structured Financial Solutions study in the portfolio transfer segment.