Jackson National Life Insurance Company has acquired a U.S. subsidiary of Swiss Re for cash in an effort to grow its traditional life insurance servicing business.
Jackson officials in Denver and its life business headquarters in Lansing, Mich., said no new product development and distribution is involved.
The 1.5 million policies it is acquiring, with assets of approximately $10 billion, will be integrated into its existing business, the officials said.
Matt Gonring, a spokesman for Jackson in Lansing said that, “our core competence is technology and service, and support for policyholders.”
“We plan to integrate this book of business into the Jackson infrastructure,” he said.
The company is SRLC America Holding Corp. (SRLC).
Jackson will pay $621 million in cash for the business, and will finance the purchase internally.
Swiss Re will retain a portion of the SRLC business through reinsurance arrangements to be undertaken prior to the closing. The transaction is subject to regulatory approval and is expected to close in the third quarter of 2012, Jackson officials said.
Jackson National is a wholly-owned subsidiary of Prudential plc, based in London, the U.K.'s largest insurer by market value.
Mike Wells, president and CEO of Jackson said, “the purpose of the deal is to diversify Jackson’s earnings by increasing the amount of income we generate from underwriting activities thereby enhancing the quality of our earnings and our ability to remit more cash to our parent, Prudential plc.”
Jackson National is a relatively minor player in the life insurance business, its officials said. The new acquisition is designed to enlarge the critical mass of this servicing business, according to a spokesman. The spokesman said that in 2004, Jackson National acquired the Life Insurance Company of Georgia for the same reason.
However, it is the third largest player in the U.S. variable annuity market. Its main business is variable, fixed and equity-indexed annuities, which its officials term “fixed index” products.
SRLC’s primary operating business is Reassure America Life Insurance Company (REALIC).
The focus of the company is to acquire existing life, term and variable life policies.
Since 1995, REALIC has completed a significant number of stock acquisitions and reinsurance arrangements through which it has acquired a diverse portfolio of traditional US life insurance business, it says on its website.