Protective Life Corp. has agreed to acquire a midsize life and annuity unit from JPMorgan Chase & Company for about $1.2 billion.
Protective, Birmingham, Ala., hopes to close on the acquisition for the unit, Chase Insurance Group, Elgin, Ill., by Sept. 30.
Chase, New York, ended up with the insurance operations which include 5 separate stock companies, as a result of acquisitions, including a 2003 acquisition by a bank that is now part of Chase. A major part of the insurance unit previously was owned by Zurich Financial Services Group, Zurich.
Chase Insurance reported $79 million in operating earnings for 2005 on $644 million in revenue, Chase says.
Chase says it is selling the insurance underwriting business because the business is so much smaller than the company’s core banking business.
Chase plans to continue to sell life insurance and annuities without actually underwriting the products, the company says.
At Protective, “our emphasis in 2006 will be on the integration of the insurance companies to be acquired from JPMorgan,” John Johns, Protective Life’s president, says in a statement.
Protective Life is making the deal to increase the scale and profitability of its operations, the company says.
Protective Life plans to reinsure about 50% of the Chase Insurance business with Wilton Re Holdings Ltd., Hamilton, Bermuda, and 100% of the Chase Insurance variable annuity business with Allmerica Financial Life Insurance and Annuity Company, a unit of Goldman Sachs Group Inc., New York, after completing the Chase Insurance acquisition, Protective Life says.
Chase Insurance sells level-premium term and other traditional life products as well as fixed and variable annuities.
The business has about 1.2 million life insurance and annuity policies in-force and statutory reserves of about $8.7 billion.
The Chase Insurance acquisition appears to be a good deal for Protective Life and a sign that other companies with excess capital may be able to find good deals of their own, according to Jason Zucker, a securities analyst with Fox-Pitt, Kelton, New York.