In a deal valued at $1.2 billion, Great-West Lifeco Inc. is selling its U.S. individual life insurance and annuity business to Dai-ichi Life Holdings Inc.’s Protective Life Corp. The insurer said that its Colorado-based Great-West Life & Annuity Insurance Co. will keep a small block of participating life insurance policies that will be administered by Protective Life after the deal’s completion, expected by mid-year.
“This transaction allows us to focus on the retirement and asset-management markets in the U.S.,” Great-West Lifeco Chief Executive Officer Paul Mahon said in the statement. “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 from the sale.”
“The transaction is positive to the extent that it involves the exit of non-core (low return, low growth) operations that will yield C$1.6 billion of deployable cash,” National Bank Financial analyst Gabriel Dechaine wrote in a note. “On the other hand, the transaction reduces GWO’s earnings by 5 percent” and “results in a small book-value hit.”
Bloomberg