Great-West Lifeco to exit U.S. individual life insurance and annuity business

The sale, which includes bank-owned and corporate-owned life insurance, single premium life insurance, individual annuities, and closed block life insurance and annuities, will not affect its Canadian life insurance businesses, Great-West says in a release.

As the company aims to increase focus on the retirement market, GWL&A’s retirement and investment management divisions (Empower Retirement and Great-West Investments) are not affected by the transaction.

The after-tax transaction value will be about US$1.2 billion ($1.6 billion), Great-West Lifeco estimates excluding one-time expenses and subject to post-closing adjustments.

This includes a considerable positive ceding commission to its U.S. entities and a capital release of about US$400 million, Great-West Lifeco says.

GWL&A contributed approximately US$95 million to Great-West Lifeco’s net earnings for the first three quarters of 2018.

“We continually evaluate capital deployment opportunities at Great-West Lifeco. 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 of the sale,” says Paul Mahon, president and CEO, Great-West Lifeco, in a statement.

GWL&A will keep a small block of participating life insurance policies, which will be administered by Protective after the close of the transaction.

“The combined strength of the businesses built by Great-West and Protective creates new opportunities for our customers and distribution partners who will now be very well served by Protective,” said Robert Reynolds, president and CEO, Great-West Lifeco U.S. LLC. “Our team is committed to ensuring a seamless transition to Protective for our customers.”

The transaction is expected to close in the first half of 2019.