Industrial Alliance Insurance and Financial Services, Inc. of Quebec has agreed to sell its U.S. fixed annuity business to Security Benefit Life Insurance Co. and Equitrust Life Insurance Co., both affiliates of U.S.-based Guggenheim Partners. The deal represents approximately $800 million in contract liabilities and related assets.
In a statement announcing the deal, Industrial Alliance estimated the transaction will increase its solvency ratio by eight percentage points. The deal is subject to regulatory approvals in the U.S.
Michel Naud, manager of investor relations for Industrial Alliance, told LifeHealthPro.com that the move aligns with the company’s previous stated mission of focusing on its life insurance business, a strategy it announced at its June Investor Day. “We indicated the annuity business was a challenge and it was a difficult market in the U.S. with the low interest rates,” he said. “In the meantime, we told people our plan for the future was to focus on life insurance.”
In 2010, IA American Life Insurance Co. acquired Arizona-based American-Amicable Holding, Inc. for $145 million. According to the company, in 2011, it achieved year-over-year organic growth of 26% in its life business. “Going forward, its plan is to scale up its U.S. life business, reduce costs and increase its contribution to the overall profitability of Industrial Alliance.”
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Operating in Canada and the U.S., Industrial Alliance sells a variety of insurance products, including life, auto, home and health, as well as retirement plans and mutual funds. It’s Canada’s fourth largest life and health insurance company.
In the first quarter, the company logged $10.1 million in life insurance sales, up from $9.2 million in the fourth quarter of 2011.