v3.26.1
Assured Life Re Acquisition
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Assured Life Re Acquisition Assured Life Re Acquisition
 
On the Acquisition Date, the Company purchased all of the outstanding share capital in Warwick, which is the 100% indirect owner of Assured Life Re, for a purchase price of $158 million, subject to certain post-closing adjustments (Assured Life Re Acquisition).

The Assured Life Re Acquisition was accounted for under the acquisition method of accounting, which requires that the assets and liabilities acquired be recorded at fair value. The most significant of these determinations related to the valuation of its insurance liabilities. See Note 7. Annuity Reinsurance.

The fair value of each block of business was measured using a discounted cash flow methodology based on assumptions that market participants would use in pricing the asset. The discount rate reflects the risk-free rate, an explicit risk margin, an adjustment for the Company’s non‑performance risk, and, with respect to the PRT block of business, an illiquidity premium.

The comparison of the fair value of each of the PRT and MYGA blocks of business to their respective insurance liabilities and policyholder account balances resulted in a positive value of business acquired (VOBA) for the PRT block of business of $14 million, which is reported in “other assets” in the condensed consolidated balance sheets, and a negative VOBA for the MYGA block of business of $14 million, which is reported in “other liabilities” in the condensed consolidated balance sheets. The estimated weighed-average useful life is 10.3 years for the PRT block of business and 2.3 years for the MYGA block of business.

The excess of the fair value of net assets acquired over the consideration transferred was recorded as a provisional bargain purchase gain in “other income” in the condensed consolidated statements of operations. The accounting for the acquisition is not final and is pending the finalization of the valuation of the net assets acquired and the calculation of the final purchase price. The Company believes the provisional bargain purchase gain was attributable to unique circumstances in connection with the sellers’ desire to exit Warwick.

The following table shows the net effect of the Assured Life Re Acquisition on the Acquisition Date.

Net Effect of
Assured Life Re Acquisition
(in millions)
Cash purchase price$158 
Assets purchased:
Investments631 
Cash13 
Funds withheld 293 
Other assets35 
Total assets972 
Liabilities assumed:
Future policy benefits for annuity reinsurance contracts (including deferred profit liability)504 
Policyholder account balances for annuity reinsurance contracts270 
Other liabilities34 
Total liabilities808 
Net assets 164 
Bargain purchase gain$6 

Revenue and net income (loss) related to Assured Life Re from the Acquisition Date through June 30, 2026 included in the condensed consolidated statements of operations were approximately $11 million and $(1) million for second quarter 2026 and $25 million and $1 million for six months 2026, respectively. The Company incurred $7 million of transaction costs primarily consisting of legal and advisory fees related to the Assured Life Re Acquisition. Of this amount, $4 million was
recognized as expenses in six months 2026 and reported in “other operating expenses” in the condensed consolidated statements of operations.

Had the Assured Life Re Acquisition occurred on January 1, 2025, the unaudited pro forma revenue would be $194 million and $451 million for second quarter 2026 and six months 2026, respectively, and $268 million and $617 million for second quarter 2025 and six months 2025, respectively. The unaudited pro forma net income would be $40 million and $121 million for second quarter 2026 and six months 2026, respectively, and $90 million and $268 million for second quarter 2025 and six months 2025, respectively. The pro forma accounts include the estimated historical results of the Company and Assured Life Re and pro forma adjustments related to the differences in the accounting standards and policies between the Company and Assured Life Re, as well as the bargain purchase gain and acquisition-related expenses, together with the consequential tax effects. The unaudited pro forma combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined as of January 1, 2025, nor is it indicative of the results of operations in future periods.

Statutory Information and Restrictions

Assured Life Re prepares its statutory financial statements in conformity with the accounting principles set forth in Bermuda’s Insurance Act 1978, amendments thereto and related regulations (collectively, the Insurance Act). As of December 31, 2016, the Bermuda Monetary Authority (the Authority) requires insurers to prepare statutory financial statements in accordance with the particular accounting principles adopted by the insurer (which, in the case of Assured Life Re, are GAAP), subject to certain adjustments. The adjustments relate to certain assets designated as “non-admitted assets” which are charged directly to statutory surplus rather than reflected as assets as they are under GAAP.

Under applicable law and regulations, Assured Life Re may declare and pay dividends during 2026, without prior approval of the Authority, in an aggregate amount equal to up to 25% of its total statutory capital and surplus as of the prior year end (or $41 million). Any such dividends would also be subject to the limitations that they may not exceed Assured Life Re’s statutory surplus or its unencumbered assets. The Insurance Act also prohibits Assured Life Re from declaring or paying any dividends to any person other than a policyholder unless its approved actuary certifies that the proposed amount of the dividend would not exceed the excess of funds available to satisfy its long-term business obligations. As of June 30, 2026, Assured Life Re did not have a statutory surplus to pay dividends; its unencumbered assets were $27 million.

In addition, Assured Life Re may make capital distributions during 2026 of up to $31 million in the aggregate without prior approval of the Authority. Given Assured Life Re’s focus on capital intensive growth initiatives, it does not expect to declare or pay any dividends or to make any capital distributions during 2026.