Lincoln Financial is hoping a new deal with Liberty Mutual Insurance Group will help it attract large voluntary benefits and worksite marketing customers.
Lincoln Financial has agreed to acquire Liberty Life Assurance Company from Liberty Mutual and keep Liberty Life’s group benefits business.
Another company, Protective Life Corp., would acquire Liberty Life’s individual life and annuity business through a reinsurance arrangement.
The companies involved announced the deal today.
They say Lincoln Financial plans to pay $1.02 billion to Liberty Mutual, and to add $425 million in capital to the Liberty Life life unit.
Protective Life has agreed to pay $1.17 billion for Liberty Life’s individual business.
The companies hope to get the approvals they need to complete the deal by June 30.
Liberty Mutual, which is best known as a property-casualty insurer, said it’s making the deal to focus on its core property-casualty business.
Lincoln Financial’s benefits arm has been focusing on reaching employers with fewer than 1,000 employees.
The Radnor, Pennsylvania-based company said in a slidedeck describing the deal that it’s hoping the Liberty Life acquisition will help it reach national benefits brokers and large employers, and accelerate growth in sales of products that are paid for by the employees, rather than by the employers.
Lincoln Financial said it will pay some of the deal costs by issuing debt.
Richard Bielen, the president of Birmingham, Alabama-based Protective Life, said his company hopes to provide value for Liberty Life’s individual life and annuity customers.
Protective Life sees acquiring the Liberty Life individual life and annuity block as the foundation for an “opportunity for growth and expansion through these segments in the future.”
Protective Life is now a subsidiary of Dai-ichi Life Holdings Inc. of Tokyo.
The Rating Agency Perspective
Fitch Ratings said in a comment that it has a positive outlook on Lincoln Financial and is neutral about the possible effects of the Liberty Life deal.
The deal should help Lincoln Financial increase its size in the group life and group disability markets, and diversify its sources of revenue, Fitch said.
Making an acquisition work can be tricky, but Lincoln Financial has been increasing rates for many group benefits customers in the past few years, and the company’s success at repricing the group insurance business may be a sign it can handle an acquisition, Fitch said.
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