Great-West Lifeco selling U.S. individual life insurance business

Winnipeg-based Great-West Lifeco Inc. is selling its U.S. individual life insurance business to focus on the U.S. retirement market, the company announced Thursday.

The insurer’s Greenwood Village, Colo.-based subsidiary, Great-West Life & Annuity Insurance Co. (GWL&A), will sell its individual life insurance and annuity business to Protective Life Insurance Company, the primary subsidiary of Birmingham, Ala.-based Protective Life Corp.

The sale, which includes bank-owned and corporate-owned life insurance, single premium life insurance, individual annuities, and closed block life insurance and annuities, will not affect its Canadian life insurance businesses, Great-West says in a release.

As the company aims to increase focus on the retirement market, GWL&A’s retirement and investment management divisions (Empower Retirement and Great-West Investments) are not affected by the transaction.

The after-tax transaction value will be about US$1.2 billion ($1.6 billion), Great-West Lifeco estimates, excluding one-time expenses and subject to post-closing adjustments.

This includes a considerable positive ceding commission to its U.S. entities and a capital release of about US$400 million, Great-West Lifeco says.

GWL&A contributed approximately US$95 million to Great-West Lifeco’s net earnings for the first three quarters of 2018.

“We continually evaluate capital deployment opportunities at Great-West Lifeco. With the strengthened capital position resulting from this transaction, we will also consider other capital management activities, including potential share repurchases, to mitigate the earnings impact of the sale,” says Paul Mahon, president and CEO, Great-West Lifeco, in a statement.

GWL&A will keep a small block of participating life insurance policies, which will be administered by Protective after the close of the transaction.

The transaction is expected to close in the first half of 2019.

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