The U.S. individual life market could soon get a new player that really wants to be there.
Meiji Yasuda Life Insurance Co. has agreed to pay Legal & General Group the equivalent of $2.3 billion for a deal that would include the company's Legal & General America business.
Legal & General America issues policies through Banner Life Insurance Company, which built a digital platform that made the process of term life policies faster.
Legal & General America is the parent of Banner Life, a term life issuer that used artificial intelligence to create a fast, automated life insurance underwriting system. The system helped make Legal & General America the third biggest U.S. individual term life issuer in 2023, with $105 billion in coverage written.
Meiji Yasuda is a Tokyo-based, policyholder-owned mutual insurer that's already a big, quiet player in the U.S. group life market.
"The group insurance market tends to be susceptible to economic trends," according to a Meiji Yasuda presentation discussing the deal. "An addition of individual life insurance, which is less susceptible to economic trends, is intended to increase and stabilize profit."
Meiji Yasuda says it aims to put the needs of the policyholders first. "Our mission is to deliver reliable peace of mind to our customers through sustainable growth," the company says.
What it means: Meiji Yasuda could come in and wake up the individual term life market.
That might create new coverage options for clients who want to keep their life insurance and investments separate and maximize death benefit protection early in life.
The players: The seller, Legal & General, is a London-based financial services giant with $1.5 trillion in assets.
The U.S. businesses have about 900 employees and headquarters offices in Frederick, Maryland.
The term life business is one of Legal & General's two big U.S. businesses. Legal & General is also an active player in the U.S. pension risk transfer market. Insurers in the pension risk transfer market sell big group annuities that employers can use to manage pension risk.
The buyer, Meiji Yasuda, has the equivalent of $350 billion in assets.
It bought StanCorp Financial, the parent of Standard Insurance Co., for $5 billion in 2016.
It acquired the Elevance Health group insurance businesses in 2024 for a price that was not revealed.
Meiji Yasuda now ranks as one of the 20 biggest issuers of U.S. life insurance, with about $66 billion of coverage in force and $1.2 billion in 2023 group life premium revenue, according to the American Council of Life Insurers' 2024 Life Insurers Fact Book.
The deal: Meiji Yasuda expects to get Legal & General America, a 5% stake in Legal & General, and a chance to enter the U.S. pension risk transfer market through an alliance with Legal & General.
Meiji Yasuda and Legal & General hope to get the regulatory approvals they need to complete the deal by early 2026.
The thinking: Antonio Simoes, Legal & General's chief executive officer, said during a conference call with securities analysts that the deal should be good for increasing returns on capital.
The U.S. protection business is performing well and has been growing rapidly, but "it offers limited synergies with the rest of our businesses," Simoes said.
Meiji Yasuda will pay a price equal to about 30 times the earnings of the operations it's buying, and Legal & General can invest the cash in the pension risk transfer market, Simoes said.
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