Protective Life to Enter Coinsurance Agreement with Liberty Life
October 22 2010 - 9:15AM
Business Wire
Protective Life Corporation (“Protective”) (NYSE: PL) today
announced that its principal subsidiary, Protective Life Insurance
Company (“Protective Life”), has agreed to enter into a coinsurance
agreement with Liberty Life Insurance Company (“Liberty Life”)
under the terms of which Protective Life will coinsure
substantially all of the life and health business of Liberty Life.
The transaction will close in conjunction with Athene Holding Ltd’s
acquisition of Liberty Life from an affiliate of Royal Bank of
Canada. The closing of the transaction is subject to various
regulatory approvals and other customary conditions to closing. The
closing is expected to take place in the first quarter of 2011.
The initial capital invested by Protective Life in the
transaction at closing is projected to be approximately $310
million, including the estimated ceding commission paid to Liberty
Life and the incremental capital necessary to support the business.
The transaction is expected to increase Protective’s earnings per
diluted share $0.22 to $0.26 in 2011, net of transition costs. In
2012 the impact on earnings per diluted share is expected to be an
increase of $0.34 to $0.38.
Protective previously announced, on September 14, 2010, an
agreement to acquire United Investors Life Insurance Company
(“United Investors”) from Liberty National Life Insurance Company.
On a combined basis, the two transactions are projected to increase
Protective’s earnings per diluted share by $0.37 to $0.46 in 2011
and by $0.52 to $0.60 in 2012 and to increase Protective’s return
on equity by approximately 100 to 125 basis points in 2011 and by
125 to 150 basis points in 2012.
Additionally, Protective’s Board of Directors has authorized
Protective to proceed with a separate securitization transaction in
which Protective’s insurance subsidiaries will securitize certain
redundant insurance reserves arising from term life insurance
business written by such subsidiaries in 2008, 2009 and 2010. This
transaction will free up substantial amounts of capital that are
now committed or would be committed in the future to fund the
redundant reserves. Expenses associated with the transaction will
reduce earnings per diluted share in 2011 by an estimated $0.08.
Upon the completion of this transaction, substantially all of
Protective’s redundant term life insurance reserves will be funded
beyond the peak level of those reserves. The closing of this
transaction is also subject to various conditions and
contingencies, including regulatory approvals.
John D. Johns, Protective’s Chairman, President and Chief
Executive Officer, stated, “We are pleased to announce another
important transaction. This transaction and the United Investors
acquisition, on a combined basis, will increase our total life
insurance reserves by approximately 18%. Protective has a proven
track record of successfully acquiring companies and blocks of
business, and this transaction demonstrates once again our
industry-leading capabilities in this strategically important area
of our business.”
The Company will host a brief conference call for management to
discuss the transaction with analysts and professional investors on
October 22, 2010 at 12:00 noon Eastern. Analysts and professional
investors may access this call by dialing 1-866-804-6920
(international callers 1-857-350-1666) and entering the conference
passcode: 31099850. A recording of the call will be available from
3:00 p.m. Eastern October 22, 2010 until midnight November
5, 2010. The recording may be accessed by calling
1-888-286-8010 (international callers 1-617-801-6888) and entering
the passcode: 33303656.
The public may access a live webcast of the call, along with a
call presentation, on the Company's website at
www.protective.com.
Protective Life Corporation provides financial services through
the production, distribution and administration of insurance and
investment products throughout the United States. It has annual
revenues of approximately $3.1 billion and as of December 31,
2009 had assets of approximately $42.3 billion.
FORWARD-LOOKING STATEMENTS
This release includes “forward-looking statements” that may
express expectations of future events and results regarding the
proposed transactions, including but not limited to statements
regarding the expected benefits and costs of the proposed
transactions, the ability to complete the proposed transactions,
and the expected timing of the completion of the proposed
transactions. All statements that express expectations for and
results of future events rather than historical facts are
forward-looking statements that may involve certain risks and
uncertainties. Protective cannot give assurance that such
statements will prove to be correct. The factors that could affect
the future events include, but are not limited to, general economic
conditions and the following known trends and uncertainties:
Protective Life may not be able to complete the transactions due
to, among other things, the inability of the parties to satisfy the
various closing conditions, including the receipt of required
regulatory approvals; completion of the transactions may be more
costly or may take longer than expected; the financing structure of
the transactions may be different than currently contemplated; the
actual financial results of the transactions could differ
materially from Protective’s expectations and may be impacted by
items not taken into account in its forecasts and/or its earnings
per share calculations; and Protective Life’s expectations
regarding its ability to successfully integrate and transition the
acquired operations and satisfy its legal and compliance
obligations in relation to the transactions may prove to be
incorrect. In addition, please refer to Part I, Item 1A, Risk
Factors and Cautionary Factors that may Affect Future Results of
Protective’s most recent Form 10-K; Part II, Item 1A, Risk Factors,
of Protective’s subsequent quarterly reports on Form 10-Q; and
Protective’s reports filed on Form 8-K for more information about
risk factors. Protective assumes no obligation and does not intend
to update these forward-looking statements.
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