Nassau Financial to Acquire Foresters' U.S. Life Business

The company that acquired the Phoenix Companies Inc. in 2016 is pushing ahead with efforts to make itself a major player in the U.S. life and annuity markets.

Nassau Financial Group L.P. of Hartford, Connecticut, today announced that it has agreed to acquire Foresters Financial Holding Company Inc. of New York and Foresters Life Insurance and Annuity Company from The Independent Order of Foresters.

The price of the deal was not immediately available.

The New York State Department of Financial Services is one of the entities with a say over the deal.

The Players

The buyer, Nassau Financial, is the Hartford, Connecticut-based company popularly known as Nassau Re.

The company was founded in 2015 with about $750 million in capital commitments from Golden Gate Capital, a private investment firm. Golden Cate Capital may be best known for being the current owner of the Red Lobster restaurant chain.

The top Nassau Financial executives, including Phillip Gass, the chief executive officer, previously were part of the HRG Group Inc. team that helped HRG acquire Fidelity & Guaranty Life.

Nassau Financial came to national attention, as Nassau Re, soon after its founding by agreeing to acquire the Phoenix Companies Inc. of Hartford. Phoenix was founded in 1851, and it had been one of the biggest annuity issuers in the United States. It ran into trouble starting in the early 2000s, after interest rates fell and business conditions changed.

Nassau Financial has absorbed a number of other life insurers, including American Pioneer Life Insurance Company, Guarantee Reserve Life Insurance Company, North American Company of Life and Health, and Pennsylvania Life Insurance Company, via the acquisitions of Constitution Life Insurance Company ad Pyramid Life Insurance Company from Universal American.

The company has been managing blocks of in-force policies for many of the companies it has acquired.

But it has rebranded the Phoenix life and annuity insurance company subsidiaries as Nassau companies, and it has been actively writing new life and annuities on the Nassau Life brand name.

Nassau Financial has operated the old Phoenix companies as active issuers since it acquired them.

In 2018, Nassau Life introduced a single-premium multi-year guarantee annuity contract.

Earlier this month, the company introduced a non-security indexed annuity.

The company is also actively selling, and paying agents commissions to sell, other products, such as term life insurance and whole life final expense insurance.

Nassau Financial says it has a total of about $23 billion in assets.

The seller, Foresters, is a Toronto-based, member-owned fraternal insurer.

Ten years ago, the company was trying to get into the asset-management business. The company agreed in 2010 to acquire First Investors Consolidated Corp., a New York-based investment management company. Foresters ended up with a First Investors life insurance company affiliate, First Investors Life Insurance Company, and the life insurance company's holding company.

Foresters rebranded the First Investors life company and its holding company as Foresters companies in 2015.

Since then, Foresters has changed course and decided to focus on selling traditional fixed life insurance products. The company agreed last year to sell the old First Investors mutual funds to Macquarie Investment Management, and to sell the old First Investors broker-dealer and advisory business to Cetera.

Foresters completed the sale of the old First Investors mutual fund business to Macquarie last week.

Foresters says the U.S. operations Nassau Re is acquiring have about $2.5 billion in assets and about 112,000 life insurance policies and annuity contracts in force.

Even after selling the former First Investors life business, Foresters would still continue to own a major U.S. branch of the Toronto-based fraternal organization, and it would also continue to own some other U.S. financial services subsidiaries, according to an organizational chart included in a 2017 U.S. Securities and Exchange Commission filing for a variable life product.

The Future

Nassau Financial and Foresters gave no details about Nassau Financial's plans for the Foresters operations and employees.

Gass said in a statement that the deal "marks an exciting next step for Nassau, as we seek to expand more broadly across insurance and financial services."

"We appreciate the opportunity to work closely with Foresters to provide seamless execution to meet their strategic objectives," Gass said.

"This acquisition further supports our continued focus and momentum in expanding our franchise, including several recent product launches and Insurtech initiatives," Gass said.

Correction: The size of Nassau Re's original capital commitment from Golden Gate Capital was described incorrectly in an earlier version of this article. The amount was $750 million.

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