AM Best has commented that the Credit Ratings of Great-West Lifeco, Inc. (Great-West) (Winnipeg, Manitoba) and its insurance subsidiaries remain unchanged following the announcement of a reinsurance agreement with subsidiaries of Protective Life Corporation (Protective).

Based on the terms of the agreement, Great-West estimates that the transaction will result in an after-tax transaction value of approximately USD 1.2 billion (CAD 1.6 billion), excluding one-time expenses and subject to contingent post-closing adjustments. The value includes a significant positive ceding commission to their U.S. entities and a capital release of approximately USD 400 million (CAD 530 million).

The business to be transferred, which is marketed under the Great-West Financial brand, includes bank-owned and corporate-owned life insurance, single premium life insurance, individual annuities, and closed block life insurance and annuities. This business contributed approximately USD 95 million (CAD 120 million), to Great-West’s net earnings for the first three quarters of 2018.

The deal consists of seasoned blocks of business from Great-West Life & Annuity Insurance Company, Great-West Life & Annuity Insurance Company of New York, The Canada Life Assurance Company (U.S. Branch) and The Great-West Life Assurance Company (U.S. Branch).

The transaction is targeted to close in the second quarter of 2019 and allows Great-West to focus on the retirement and asset management markets in the U.S. AM Best notes that the transaction, while sizable, has a modest impact to Great-West’s overall financial position and business profile given the company’s large global footprint and product diversification.

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