CPPIB Enters US Life Insurance Realm Through Wilton Re Acquisition

The $201.5 billion pension plan is expected to complete the purchase of the life insurance and reinsurance provider by August 2014.

(March 24, 2014) — Canada Pension Plan Investment Board (CPPIB) has entered into the US insurance business by acquiring life insurance provider Wilton Re for $1.8 billion.

CPPIB will own 100% of Wilton Re Holding Limited, a holding company and subsidiaries including Wilton Reinsurance Bermuda Limited, Wilton Reassurance Company in Minnesota, Wilton Reassurance Life Company of New York, and Texas Life Insurance Company.

This is the Toronto-based pension’s first direct investment in the insurance business and its largest direct private equity deal. The transaction is expected to close prior to August 2014.

“In making a long-term investment in Wilton Re, CPPIB views the company as an ideal platform through which CPPIB can deploy significant follow-on capital at scale in the US life insurance sector,” said André Bourbonnais, senior vice president of private investments at CPPIB, in a statement.

Bourbonnais also said the Bermuda-based reinsurance provider could help the C$201.5 billion (US$180 billion) fund expand into closed-block life insurance.

“Closed-block life insurance is an asset class with attractive risk-adjusted returns, well-suited to our long-term horizon,” he said.

According to CPPIB’s release, Wilton Re had invested more than $1.7 billion in “a variety of strategic in force reinsurance and M&A transactions” since its inception in 2005. As of December 31, 2013, it had $8.2 billion in total assets.

“We are investing alongside and share a common vision with Wilton Re’s management team, led by Chris Stroup, and together we plan to invest further capital into the business to support its continued growth for many years to come,” Bourbonnias said. “As a AAA rated long-term investor, we believe CPPIB is an ideal shareholder for Wilton Re’s employees, policyholders, and client partners.”

Wilton Re Chairman and CEO Chris Stroup added: “CPPIB ownership positions the company for growth and enhances our service offerings to clients and policyholders. 

“CPPIB represents the next phase for Wilton Re—a strategic owner, committed to our business model, with a very long term investment horizon and unparalleled capital resources. Under CPPIB ownership, we anticipate the capital resources necessary to accelerate growth and expand our core In Force Solutions and middle market insurance, and enhance our competitiveness overall.”

According to the pension fund’s quarterly reports, CPPIB saw an $8.7 billion increase in assets and a gross investment return of 5.9% for the quarter ending on December 31, 2013.

Mark Wiseman, president and CEO of CPPIB, in February: “The exceptional performance of public equities contributed to the fund’s third quarter results. Major equity indices attained all-time highs and all of our investment programs delivered significant gains, propelling the fund past $200 billion for the first time.

“It is with that focus in mind that we continued to diversify the portfolio globally with a number of notable investments during the recent quarter carried out in multiple markets.”

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