COLUMBUS, Ga., March 19, 2020 /PRNewswire/ -- Aflac
Incorporated (NYSE: AFL) announced today that its insurance
subsidiaries American Family Life Assurance Company of Columbus (Aflac of Columbus) and American Family Life Assurance
Company of New York (Aflac of
New York) have entered into a
definitive agreement to acquire Zurich North America's U.S.
Corporate Life and Pensions (Group Benefits) business, which
consists of group life, disability and absence management
products.
"We are very excited to acquire the Group Benefits platform of
Zurich North America," said Teresa L.
White, president of Aflac U.S. "This strategic transaction
further enhances our value proposition to brokers and employers and
aligns with our vision of being the number one distributor of
benefit solutions to the U.S. workforce."
Aflac of Columbus and Aflac of
New York will reinsure on an
indemnity basis Zurich North America's U.S. in-force group life and
disability policies with annualized earned premium of approximately
$115 million. Aflac will also acquire
assets needed to support the group life and disability business,
along with an absence management platform. Subject to regulatory
approvals and customary closing conditions, the transaction is
expected to close in the second half of 2020.
It is anticipated that Zurich North America employees dedicated
to the U.S. group life and disability business will transfer to
Aflac. In addition, Aflac and Zurich have entered into an agreement with
Benefit Harbor LP to transfer the assets and employees of Benefit
Harbor Insurance Services, the outsourced platform supporting the
group life and disability business of Zurich North America, to
Aflac. Aflac has separately expanded its relationship with Benefit
Harbor to provide certain specialized services to group life and
disability clients. No changes are expected in the location of
where business activities reside today.
"This transaction, together with last year's acquisition of
Argus Dental and Vision, expands Aflac's value proposition and
enhances our position on the first page of the employee benefits
enrollment," said Richard L. Williams,
Jr., executive vice president and chief distribution officer
of Aflac U.S. "We intend to build upon the strong framework created
by Zurich by continuing to grow
Aflac's group benefits business and provide a more holistic product
set to brokers and employers."
In addition to the transaction, Aflac's acquired group benefits
business will be included as a partner within Zurich's Global Employee Benefits Solutions
Partner Network, allowing Aflac to offer its employee benefit
products to Zurich's global
clients with a U.S. presence.
The transaction is consistent with Aflac Incorporated's strategy
for capital deployment into growth initiatives. Funding of the
transaction, along with required capital in support of assumed
businesses, will come from capital held within the U.S. insurance
companies. Aflac of Columbus ended
2019 with a risk-based capital ratio (RBC) of 539% and estimates
the acquisition will impact RBC in the range of 15 to 20 points.
Aflac expects the acquisition and associated growth expenses to be
dilutive to 2020 adjusted earnings per diluted share in the range
of two to three cents. Aflac
further expects modest run-rate dilution over the near-term as it
continues to expand the platform.
Piper Sandler & Co. served as
financial advisor and Sidley Austin LLP as legal advisor to Aflac
Incorporated. Barclays served as financial advisor and Willkie Farr & Gallagher LLP as legal
advisor to Zurich.
Aflac management will address questions regarding the
transaction and overall strategy on Aflac Incorporated's first
quarter earnings call scheduled for April
30, 2020.
ABOUT AFLAC INCORPORATED
Aflac Incorporated (NYSE:
AFL) is a Fortune 500 company, helping provide protection to more
than 50 million people through its subsidiaries in Japan and the U.S., where it is a leading
supplemental insurer by paying cash fast when policyholders get
sick or injured. For more than six decades, insurance policies of
Aflac Incorporated's subsidiaries have given policyholders the
opportunity to focus on recovery, not financial stress. Aflac Life
Insurance Japan is the leading provider of medical and cancer
insurance in Japan where it
insures 1 in 4 households. For 14 consecutive years, Aflac has been
recognized by Ethisphere as one of the World's Most Ethical
Companies. In 2020, Fortune included Aflac Incorporated on its list
of World's Most Admired Companies for the 19th time, and Bloomberg
added Aflac Incorporated to its Gender-Equality Index, which tracks
the financial performance of public companies committed to
supporting gender equality through policy development,
representation and transparency. To find out how to get help with
expenses health insurance doesn't cover, get to know us at
aflac.com or aflac.com/espanol.
Aflac herein means American Family Life Assurance Company of
Columbus and American Family Life
Assurance Company of New York.
ABOUT ZURICH'S CORPORATE
GROUP LIFE AND PENSIONS BUSINESS
Zurich North America's Corporate Group Life and
Pensions business offers exclusively true group life, short- and
long-term disability and absence management solutions aimed at
delivering an end-to-end offering that help make it easier for
companies to manage their employee absences while also helping
align with federal and state leave laws and quickly adapt as new
laws are passed.
FORWARD-LOOKING INFORMATION
The Private Securities
Litigation Reform Act of 1995 provides a "safe harbor" to encourage
companies to provide prospective information, so long as those
informational statements are identified as forward-looking and are
accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ
materially from those included in the forward-looking statements.
The company desires to take advantage of these provisions. This
document contains cautionary statements identifying important
factors that could cause actual results to differ materially from
those projected herein, and in any other statements made by company
officials in communications with the financial community and
contained in documents filed with the Securities and Exchange
Commission. Forward-looking statements are not based on historical
information and relate to future operations, strategies, financial
results or other developments. Furthermore, forward-looking
information is subject to numerous assumptions, risks and
uncertainties. In particular, statements containing words such as
"expect," "anticipate," "believe," "goal," "objective," "may,"
"should," "estimate," "intends," "projects," "will," "assumes,"
"potential," "target," "outlook" or similar words as well as
specific projections of future results, generally qualify as
forward-looking. Aflac undertakes no obligation to update such
forward-looking statements.
The company cautions readers that the following factors, in
addition to other factors mentioned from time to time, could cause
actual results to differ materially from those contemplated by the
forward-looking statements: ability to attract and retain
qualified sales associates, brokers, employees, and distribution
partners; events related to the ongoing Japan Post investigation
and other matters; competitive environment and ability to
anticipate and respond to market trends; deviations in actual
experience from pricing and reserving assumptions; ability to
continue to develop and implement improvements in information
technology systems; defaults and credit downgrades of
investments; exposure to significant interest rate risk;
concentration of business in Japan; limited availability of acceptable
yen-denominated investments; failure to comply with
restrictions on policyholder privacy and information security;
interruption in telecommunication, information technology and other
operational systems, or a failure to maintain the security,
confidentiality or privacy of sensitive data residing on such
systems; catastrophic events including, but not necessarily limited
to, epidemics, pandemics, tornadoes, hurricanes, earthquakes,
tsunamis, war or other military action, terrorism or other acts of
violence, and damage incidental to such events; difficult
conditions in global capital markets and the economy; ability to
protect the Aflac brand and the Company's
reputation; extensive regulation and changes in law or
regulation by governmental authorities; foreign currency
fluctuations in the yen/dollar exchange rate; tax rates applicable
to the Company may change; decline in creditworthiness of
other financial institutions; significant valuation judgments
in determination of amount of impairments taken on the Company's
investments; U.S. tax audit risk related to conversion of the
Japan branch to a
subsidiary; subsidiaries' ability to pay dividends to the
Parent Company; decreases in the Company's financial strength
or debt ratings; inherent limitations to risk management
policies and procedures; concentration of the Company's investments
in any particular single-issuer or sector; differing judgments
applied to investment valuations; ability to effectively manage key
executive succession; changes in accounting standards; level
and outcome of litigation; and allegations or determinations
of worker misclassification in the United
States.
Analyst and investor contact – David A.
Young, 706.596.3264 or 800.235.2667; dyoung@aflac.com
Media contact – Catherine H.
Blades, 706.596.3014; FAX: 706.320.2288 or
cblades@aflac.com
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SOURCE Aflac Incorporated