Protective Life says a new reinsurance deal will free up capital it can use to make acquisitions.
The Birmingham, Alabama-based company said Thursday that it has agreed to have Resolution Life reinsure structured settlement annuities and universal life policies backed by $9.7 billion in reserves.
Protective will continue to administer the policies and contracts involved in the deal, the company says.
What it means: One possibility is that Protective could compete harder in the annuity market.
Resolution Life: Resolution Life is a Bermuda-based company that was controlled by Nippon Life of Tokyo and Blackstone.
Nippon Life agreed in December to buy Blackstone's stake in Resolution Life.
The deal: The life insurance policies and annuity contracts in the block were written by two protective subsidiaries, Protective Life Insurance Co. and West Coast Life Insurance Co.
The annuities involved fund lawsuit settlements. The life insurance policies to be reinsured are universal life policies with secondary benefits guarantees.
The deal is subject to approval by regulators.
Protective and Resolution Life hope to complete the deal by the end of the year.
The thinking: Protective is not saying how much capital the reinsurance deal will unlock, but it says it will invest the capital released in deals and organic growth related to life insurance, annuities, property and casualty insurance and employee benefits products.
Protective will continue to sell individual life insurance policies, including a universal life policy that comes with no-lapse guarantees, the company said.
"We remain committed to growing life insurance sales through our valued distribution partners," Rich Bielen, Protective's CEO, said in the deal announcement.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.