This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

XL Group Plc Announces Sale Of Life Reinsurance Subsidiary For $570 Million In Cash

Stocks in this article: XL

DUBLIN, Ireland, May 1, 2014 /PRNewswire/ -- XL Group plc ("XL" or the "Company") (NYSE: XL) announced today that XL Insurance ( Bermuda) Ltd has entered into a definitive agreement to sell its wholly-owned subsidiary, XL Life Reinsurance (SAC) Ltd ("XLLR"), to GreyCastle Holdings Ltd. ("GreyCastle") for $570 million in cash.  At the completion of this transaction, XLLR will reinsure the majority of XL's life reinsurance business via 100% quota share reinsurance.  This transaction covers a substantial portion of XL's life reinsurance reserves.  XL announced the run-off of its life reinsurance business in 2009.

"While complex, as driven by the nature of our life reinsurance businesses and our objective of maximizing value for XL shareholders, the real benefit of this transaction is clear and simple: XL has now dealt with the vast majority of its life reinsurance business, and has thereby taken another strong step forward in its drive to deliver top-quintile return on equity and book value growth from its core property and casualty operations," said Mike McGavick, CEO of XL.

At March 31, 2014, XL had total U.S. GAAP policy benefit reserves relating to its life operations of approximately $4.8 billion. Upon completion of the transaction, XL will retain approximately $438 million of reserves related to disability, accident and health policies and U.S. term assurance in its Life operations segment and will record a reinsurance recoverable from XLLR of $4.4 billion.

"This transaction meaningfully reduces the risk profile of the Company, which gives us additional flexibility to pursue capital management initiatives, including an expectation of buying back an additional $300 million of shares in 2014 over amounts previously contemplated," said Peter Porrino, EVP & CFO of XL.

The transaction is expected to be completed in the second quarter of 2014 and is subject to satisfaction of regulatory conditions.  XL estimates that the March 31, 2014 pro forma effect of the transaction would be an overall reduction in U.S. GAAP book value of approximately $585 million and an estimated after-tax U.S. GAAP net loss of approximately $580 million.  This estimate is subject to changes in the mark-to-market value of the underlying investment portfolio and other adjustments from March 31, 2014 through completion of the transaction.

Citigroup and J.P. Morgan Securities LLC serve as the financial advisors and Clifford Chance LLP and Skadden, Arps, Slate, Meagher & Flom LLP serve as legal counsel for XL in this transaction.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs