Goldman Sachs Creates $1 Billion Reinsurance Pool With Talcott

Goldman Sachs Group Inc. is setting up a reinsurance vehicle with Talcott Financial Group that has so far raised $1 billion.

The Bermuda-based sidecar, West Grove Re, will share premiums and losses for a portion of Talcott’s US-based annuities, the insurer and Goldman said Tuesday in a statement. Goldman Sachs Asset Management will manage the vehicle’s private-asset strategies.

“We want to be a very well risk-managed insurance business,” Talcott Chief Executive Officer Imran Siddiqui said in an interview. “We don’t swing for the fences. We tend to be pretty focused on risk-adjusted returns.”

Both Goldman and Talcott — a life insurer owned by Sixth Street Partners — made equity commitments to West Grove, with a credit facility also raising a portion of the $1 billion. The vehicle will benefit from Talcott’s insurance expertise and Goldman’s access to client capital, as well as the bank’s private credit business, according to the statement.

“This is more strategic than a simple investment management agreement,” Vivek Bantwal, global co-head of private credit for Goldman Sachs Asset Management, said in an interview. “This is a broader partnership.”

Over the next decade, West Grove Re’s annuity portfolio is expected to reach roughly $10 billion, according to a person familiar with the matter, who asked not to be named while discussing private information.

Sixth Street is among several alternative asset managers that have acquired insurers, which provide a stable pool of capital. Private-asset firms have also struck up reinsurance deals with insurers in recent years. Last year, Blackstone Inc. created a $1 billion sidecar with F&G Annuities & Life Inc., and MetLife Inc. and General Atlantic made a similar deal the previous year.

Top photo: Goldman Sachs Group Inc. signage. Photographer: Michael Nagle/Bloomberg.