Debevoise Advises Fortitude Re in Its Acquisition of a $31 Billion Block of Legacy Variable Annuities from Prudential, for a Total Transaction Value of $2.2 Billion

15 September 2021

Debevoise & Plimpton LLP is advising Fortitude Re in its acquisition of a $31 billion block of legacy variable annuities from Prudential Financial, Inc. (NYSE: PRU).

Under the terms of the agreement, Prudential will sell one of its stand-alone legal entity subsidiaries, Prudential Annuities Life Assurance Corporation (PALAC), including PALAC’s in-force annuity contracts, to Fortitude Re, for an all-cash purchase price of $1.5 billion, subject to certain adjustments at closing, plus a capital release to Prudential and an expected tax benefit. The PALAC block primarily consists of non-New York traditional variable annuities with guaranteed living benefits that were issued prior to 2011, which constitute approximately $31 billion or 17% of Prudential’s total in-force individual annuity account values as of June 30, 2021. The transaction is expected to close during the first half of 2022. For more information, please see the companies’ press release.

Fortitude Re is Bermuda’s largest multi-line composite reinsurer with unique competitive advantages and expertise to design bespoke transactional solutions for legacy Life & Annuity and P&C lines. Prudential is a global financial services leader and premier active global investment manager with more than $1.5 trillion in assets under management as of June 30, 2021, with operations in the United States, Asia, Europe, and Latin America.

The Debevoise team is led by insurance M&A partner Drew Dutton and includes associates Nick Cruz, Katie Power, Rebecca Sayles, Brita Siepker and Leron Solomon, M&A partner Ezra Borut, investment management partner Marc Ponchione, counsel Gregory Larkin and associate Chen Xu, benefits partners Jonathan Lewis and J. Michael Snypes, Jr. and associates Andrea Acosta and Douglas Hirn, tax partner Peter Furci and associate Adam Namm, and intellectual property partner Henry Lebowitz, of counsel (retired partner) Jeffrey Cunard and associate Melody Godbolt.