Another life insurance company to exit the business
Another big U.S. insurance carrier is exiting its life insurance and annuities business.
In July, Allstate Corp. of Northbrook, Ill., announced that it plans to sell its Lincoln Benefit Life Co. to Resolution Life Holdings for $600 million. Allstate said it expects the deal to close by the end of the year.
Allstate is just the latest.
In May, Athene Holding Ltd., a Bermuda-based insurance holding company, announced that had an agreement to sell the life insurance business of Aviva USA to Commonwealth Annuity and Life Insurance Co., based in Massachusetts.
In December, U.K. insurer Aviva had announced that it was selling its U.S. annuities and insurance unit to Athene Holding Ltd. for $1.8 billion. The sale of Aviva to Commonwealth Annuity is expected to occur at the same time Athene's acquisition of Aviva closes.
CEO: Strategy paying off
In 2012, Connecticut-based Hartford Financial Services Group announced it was selling most of its life insurance business so it could refocus on its property-and-casualty, group benefits and mutual funds businesses.
Liam E. McGee, chairman, president and CEO of The Hartford, told shareholders in May that the strategy of divesting itself of its individual life, retirement plans and broker-dealer operations and to place its annuity business into a runoff, appeared to be working. He said the company was sharply focused and positioned for profitable growth.
Allstate's strategy similar
Allstate gave similar reasons for exiting the life insurance business. In a press release, Thomas J. Wilson, chairman, president and CEO of The Allstate Corp., said the sale of Lincoln Benefit Life fit its strategy to serve distinct customer segments with differentiated offerings in markets where it has a competitive advantage.
The business being sold had $341 million of premiums and contract charges. That represents 15 percent of Allstate Financial's 2012 total.
As a result of the pending sale, Allstate will not sell new life insurance or retirement products through independent life insurance and annuity agencies. Allstate will continue to service policies Lincoln Benefit sold through independent life insurance and annuity agencies for 12 to 18 months. After that period, Resolution Life will administer the business.
Sale subject to approval
Resolution Life was founded by The Resolution Group, which has a track record of establishing businesses in the United Kingdom to manage life insurance policies. Resolution Life Holdings Inc. is based in Delaware. Resolution Life is separate from Resolution Limited, which is publicly traded on the London Stock Exchange and also was founded by The Resolution Group.
According to the Allstate release, Resolution Life's strategy is to acquire a number of life insurance businesses in the U.S. and focus on the needs of existing customers over the long run rather than actively seek new sales.
The sale of Allstate's life insurance unit to Resolution is subject to regulatory approval.