Jackson National Life Insurance Company
(Jackson) today announced that it has entered into an agreement to purchase SRLC America Holding Corp. (SRLC) from Swiss Re. Jackson will pay $621 million in cash for the business, subject to adjustment by application of customary purchase price mechanics to reflect the value of the business at closing. The purchase will be financed in its entirety from internal Jackson resources. Swiss Re will retain a portion of the SRLC business through reinsurance arrangements to be undertaken prior to closing. The transaction is subject to regulatory approval and is expected to close in the third quarter of 2012.
SRLC is a life insurance business that sits within the US division of Swiss Re’s Admin Re
. The primary operating subsidiary of SRLC is Reassure America Life Insurance Company (REALIC), which, since 1995, 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. The earnings of SRLC are derived from seasoned, long-duration cash flows generated principally from term life, whole life and basic universal life products. Jackson will acquire assets related to the subject business of approximately $10 billion and approximately 1.5 million policies.
Jackson, an indirect wholly owned subsidiary of the United Kingdom’s Prudential plc (NYSE: PUK), expects the transaction to be immediately accretive to the company’s IFRS
pre-tax earnings while having a modest impact on its statutory capital position. The acquisition will diversify Jackson’s earnings base by increasing the percentage of income derived from underwriting activities relative to the company’s current spread- and fee-based businesses.
Skadden, Arps, Slate, Meagher & Flom, LLP provided legal advice to Jackson in connection with this transaction.
Commenting on the acquisition, Mike Wells, President and Chief Executive Officer, Jackson, said:
“This bolt-on acquisition is in-line with our strategy and is a great opportunity to increase the scale of our life business. It is a capital efficient transaction that will produce an attractive IRR (internal rate of return) and payback period commensurate with what we achieve organically on writing new business. The transaction helps 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.”