Protective Life Signs Liberty Life Coinsurance Deal

By Warren S. Hersch

October 21, 2010 at 08:00 PM

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A subsidiary of Protective Life Corp. has agreed to coinsure the life and health business of Liberty Life Insurance Company.

Athene Holding Ltd., Hamilton, Bermuda, is paying $628 million to acquire Liberty Life, Charleston, S.C., from an affiliate of Royal Bank of Canada, Toronto (NYSE:RY), which has owned Liberty Life since 2000.

Protective Life, Birmingham, Ala. (NYSE:PL), says its Protective Life Insurance Company subsidiary will coinsure Liberty Life's individual life business.

Athene Life Re Ltd., a subsidiary of Athene Holding, plans to reinsure a portion of Liberty Life's annuity business.

Protective Life says it will invest about $310 million in the coinsurance deal. That amount includes the ceding commission paid to Liberty Life and the capital needed to support the business, Protective Life says.

Athene Holding hopes to close on Liberty Life by March 31, 2011, and Protective Life hopes to close on the coinsurance arrangement around the same time, Protective Life says.

Liberty Life's closed block of individual life insurance has about $1.6 billion in reserves and assets, and those reserves and assets will be transferred to Protective Life Insurance Company, according to Moody's Investors Service, New York.

The block of life business consists mainly of a large number of small "home service" policies with predictable persistency and mortality, according to Ann Perry, a Moody's senior credit officer.

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