Jul 01 2020

Retirement Income Group Celebrates Big New Deal

Lifetime Retirement Income has been celebrating an important milestone in its development, after its parent company – the Retirement Income Group (RIG) - secured an important deal.

Ralph Stewart, the founder and managing director of RIG, says it’s completed its first ever reinsurance deal, after previously being too small for a contract like this. Reinsurance is a when a company shares its risk by purchasing insurance policies from other insurers in order to limit their own potential loss in case of disaster. 

“Having grown to have $260 million that we are now managing, we were able to get a company in Sydney to complete a global reinsurance tender on our behalf,” Stewart says.

“It’s exciting to have reached a size where other companies are willing to recognise us and become involved with us through the reinsurance market. And it means our clients have even better protection.”

As many readers will know, Lifetime Retirement Income provides a fortnightly guaranteed lifetime income product for superannuitants, having launched in New Zealand in 2015. The Lifetime Retirement Income product moves the uncertainty around financial market investment, and how many years people will need income for, away from the retiree and onto Lifetime. Retirees that invest with Lifetime receive a regular income payment for life that supplements their New Zealand Superannuation. Products like this are common in the OECD and have trillions of dollars invested in them globally.

“When it came to considering reinsurance, we had no idea what to expect,” says Stewart.

“However, the response was amazing, with the world’s largest reinsurers responding very quickly to our tender,” Stewart says.

Those tenderers included big names like Swiss Re, Warren Buffet’s Berkshire Hathaway, as well as German company Hannover Re - Hannover Re was the successful bidder. It’s the third largest reinsurance group in the world, with revenue of €22.5 billion ($NZ39.4 billion), total assets of €71.4 billion ($NZ125 billion), and a Standard & Poor’s credit rating of AA-. Despite the due diligence for the deal being carried out at the height of the Covid-19 market volatility, it took only five weeks for RIG to reach binding terms with Hannover Re, Stewart says.

“Hannover Re deeply understands retirement income and the importance of the sector,” Stewart says.

“We are proud to be able to partner with such a large, established and experienced reinsurer. This is a tremendous outcome for our current and future retired investors.”