Industrial Alliance Insurance and Financial Services Inc. has agreed to sell all its U.S. fixed annuities and accumulation riders to Security Benefit Life Insurance Co. and to Equitrust Life Insurance Co., two affiliates of U.S.-based Guggenheim Partners.
The transaction, which represents approximately US$800 million in contract liabilities and related assets, was carried out through the U.S. branch and the U.S. subsidiaries of the Quebec City-based insurer.
The transaction will have a favourable impact on the firm’s capital, Industrial Alliance says. The insurer expects to sale to increase its solvency ratio by eight percentage points.
The transaction is subject to the regulatory approvals in the U.S.
The sale reflects the firm’s decision to focus its resources in the United States on the continued development of its life insurance business, Industrial Alliance says.
Since the acquisition of the American-Amicable platform in 2010, the insurer has successfully expanded its distribution network, built market share in new territories and in 2011 achieved year-over-year organic growth of 26% in its life business. Industrial Alliance says its plan is to scale up the U.S. life business, reduce unit costs and increase its contribution to the overall profitability of the firm.
Based in Scottsdale, Ariz. and Waco, Tex, the company’s U.S. subsidiaries are focused on the low-to-middle income market for simplified life insurance products.