Reinsurance

Advantages

• As a direct annuity writer to the international segment, Knighthead Annuity brings a high level of knowledge with respect to product design, client behavior and distribution
• Knighthead Annuity is not a competitor to its ceding partners
• Knighthead Annuity’s structural advantages and asset management capabilities permit highly competitive pricing
• Knighthead Annuity readliy supports flow transactions and does not focus solely on block transactions
• Knighthead Annuity’s multiple ratings, financial strength and existing profitable business over many years are well received by on-shore regulators
• Regular reporting is provided to cedents, including US GAAP Financial Statements audited by EY, eliminating potential confusion caused by interpreting foreign accounting standards or statutory financials
• A responsive corporate culture to provide ongoing support of a cedent’s crediting or cap rate in a rapidly changing market and interest rate environment

Reinsurance Structure

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.

• Cedent retain visibility into assets and value
• In the event of a recapture, cedent does not have to wait for reinsurer to return assets and be concerned about quality of assets provided (as could occur with other structures).
• In addition to fully funding the statutory reserves, Knighthead Annuity offers additional collateral in the form of a reasonable percentage of statutory assets in a marked to market Trust.

Investment Management

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.