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Assured Life Re Acquisition | 3 Months Ended
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Mar. 31, 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: |  |
Investments |  | 631 |
Cash |  | 13 |
Funds withheld |  | 293 |
Other assets |  | 35 |
Total assets |  | 972 |
Liabilities assumed: |  |
Future policy benefits for annuity reinsurance contracts (including deferred profit liability) |  | 504 |
Policyholder account balances for annuity reinsurance contracts |  | 270 |
Other liabilities |  | 34 |
Total liabilities |  | 808 |
Net assets |  | 164 |
Bargain purchase gain |  | $ | 6 |
Revenue and net income related to Assured Life Re from the Acquisition Date through March 31, 2026 included in the condensed consolidated statement of operations were approximately $14 million and $2 million, 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 first quarter 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 and net income would be $257 million and $81 million, respectively, for the three months ended March 31, 2026, and $349 million and $178 million, respectively, for the three months ended March 31, 2025. 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. 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. As of March 31, 2026, Assured Life Re’s statutory surplus was zero and, accordingly, it had no dividend capacity at that date; its unencumbered assets were $25 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.

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