Knighthead Annuity’s preferred structure is a “Funds Withheld” coinsurance arrangement, which is designed to ensure reinsurance credit and minimize risk to the cedent.
The “Funds Withheld” structure keeps the assets backing the statutory reserves in the legal name and control of the cedent. The assets remain on the balance sheet of the ceding company.
Investment management is performed by Knighthead Capital Management, LLC, a highly respected SEC registered investment manager based in New York.
Knighthead Capital has experience managing the retirement assets of some of the largest state and federal pension funds as well as pension assets for several private companies.
The assets of Knighthead Annuity are invested in a variety of assets including investment grade bonds, first lien mortgages, a small allocation to high yield and, when appropriate, in limited partnerships focused on value investing and preservation of capital.
Investment portfolios supporting all reinsurance transactions must consist of admitted assets and be in compliance with the applicable state regulations of the ceding insurance company.