July 24 (Reuters) - U.S. life insurer Prudential Financial said on Monday Somerset Re would reinsure about $12.5 billion of reserves backing its guaranteed universal life policies.
The deal would fetch $450 million of proceeds for Prudential, including money paid by Somerset, tax benefits and capital freed up due to the transfer of liabilities, the life insurer said.
Newark, New Jersey-based Prudential has been actively signing reinsurance deals to free up and reallocate capital as it looks to become less market-sensitive and focus on higher-growth businesses.
The company had also signed such a deal with a unit of Constellation Insurance Holdings in May.
Reserves are capital an insurer is required to maintain to pay out future claims.
Reinsurers like Somerset Re provide insurance for insurers, which may want to reduce their liability by transferring a portion of the risk.
(Reporting by Niket Nishant in Bengaluru; Editing by Dhanya Ann Thoppil)