Jackson National to buy Swiss Re's U.S. life business

Jackson National to buy Swiss Re's U.S. life business
Jackson National Life Insurance Co. will pay $621 million in cash for the life insurance assets of Swiss Re Group's American division
MAY 23, 2012
Jackson National Life Insurance Co. will pay $621 million in cash for the life insurance assets of Swiss Re Group's American division to boost its scale in that business and further diversify earnings from its primary annuity business. The deal will provide Lansing, Mich.-based Jackson with assets related to $10 billion in closed life insurance business and about 1.5 million policies. It also will increase income derived from underwriting activities, according to a Jackson statement. “We have different sources of revenue and we're tasked with growing all of them so that we're not completely dependent on one source,” said Mike Wells, chief executive of Jackson. “This transaction is a nice pickup in operating income and improves the quality of our earnings and increases our size.” Variable annuities from Jackson, which has $120 billion in assets and is a subsidiary of U.K.-based Prudential PLC, are popular with advisers for their investment flexibility and competitive guarantees. Jackson's efforts to diversify earnings come as the variable annuity industry is expected to see slower growth in 2012 because the products have become more expensive and less attractive. Some firms, including The Hartford Financial Services Group Inc., have retreated from the variable annuity business altogether. Mr. Wells said Jackson's variable annuity business “continues to do well” and its annuity products have “benefitted from a flight to quality.” Jackson is buying SRLC American Holding Corp. from Zurich-based reinsurer Swiss Re, though Swiss Re will retain some of the SRLC business through reinsurance arrangements, the companies said. Swiss Re, which will receive about $900 million in total cash proceeds from the sale, said its executives sought to unlock capital to be redeployed across the company. The transaction is subject to regulatory approvals and is expected to close during the third quarter, according to the Jackson statement.

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