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One chess piece moves

Life Health > Life Insurance

The Standard to Acquire Elevance Life and Disability Business

By Allison Bell

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What You Need to Know

  • The Standard ranked sixth in terms of U.S. group disability revenue in 2020.
  • Elevance has 4.8 million life and disability insureds.
  • If Elevance kept the disability business, it would have to apply new U.S. long-duration policy accounting rules.

StanCorp Financial Group (The Standard) has made a benefits deal that could help it expand sales of retirement plans.

The Portland, Oregon-based life insurance, annuity and benefits provider has agreed to buy the life and disability arm of Elevance Health, which provides insurance for about 4.8 million people.

Elevance — the Indianapolis-based company formerly known as Anthem — will continue to provide health coverage for 47 million people and tens of thousands of employers.

What It Means

The Standard is still out there playing ball with companies like Empower Retirement, ADP and Transamerica the group life, group disability and retirement plan markets.

The Companies

Meiji Yasuda, a life insurer based in Japan, acquired The Standard in 2016.

The Standard ranked sixth in terms of in-force policy premium revenue in Milliman’s U.S. group disability market survey for 2021.

Elevance did not participate in the survey but may have ranked in the top 20 if it had.

Elevance is a publicly traded company in the United States. The Standard is not.

Because Elevance is a publicly traded company, it would have had to apply the new long-duration targeted improvement guidelines to its disability insurance business if it kept it.

The new rules, which are part of the U.S. generally accepted accounting principles, will require affected companies to put estimates of benefits obligation value changes in their earnings every quarter and could make some insurers’ earnings more volatile.

Because The Standard is not a publicly traded company in the United States, it will not have to apply the new account rules to its disability insurance business.

Both Elevance and The Standard report on the performance of their disability insurance business using statutory accounting, but the new accounting guideline affects only the GAAP accounting rules, not statutory financial reports.

The Deal

The Standard says the combined employee benefits businesses will operate under The 00Standard brand, and that The Standard will take on Elevance’s life and disability division employees and operations.

In addition to writing life and disability coverage, the Elevance benefits business sells products and services such as accidental death and dismemberment coverage, absence management services and paid family leave services.

The Standard would get to offer life, disability and other services to Elevance customers.

The Standard is also a provider of 401(k) plans and other defined contribution plans, and the Elevance deal could help it court the employers that use Elevance health coverage as well as the company’s life and disability benefits customers.

Although the Standard and Elevance did not provide a deal price, the transaction appears to be comparable to New York Life’s $6.3 billion acquisition of the Cigna life and disability business, which valued that business at about $700 per covered life.

The New York Life-Cigna deal pricing suggests that the Elevance life and disability business might have a sale price of about $3 billion to $4 billion.

(Image: Shutterstock)

Allison Bell

Think_Allison

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