Financial services company Protective Life Corp. (PL) agreed Wednesday to acquire Mony Life Insurance Co. from parent AXA SA's (AXAHY) AXA Financial, Inc. for about $1.06 billion, including statutory capital and surplus of about $303 million. The sale includes the reinsurance of certain policies of Mony Life Insurance Co. of America or MOLA.
The deal, expected to close in the second half of 2013, is in line with AXA's capital optimization strategy and further growth in the U.S.
"This transaction allows us to further grow our US business where we have been achieving good momentum while freeing up capital invested in closed portfolios to improve our financial flexibility and enable additional investment in high growth markets and businesses," AXA Chairman and CEO Henri de Castries said in a statement.
AXA Financial is currently focusing on expanding into Asia and emerging markets and shrinking its presence in North America following years of underperformance in that region.
AXA Financial acquired the Mony Group, Inc. and its subsidiaries for $1.5 billion in 2004. Since 2005, Mony has generated $1.0 billion of cumulated statutory net income.
AXA is now selling a run-off mortality book primarily underwritten before 2004, with $10.5 billion or 8.0 billion euros of statutory liabilities as of end of 2012.
"Protective has a proven history of successfully managing these types of closed book transactions, and this, together with their decision to retain the current MONY policy administration team, means that MONY and MLOA policyholders will continue to receive high levels of professional service," AXA Financial President and CEO Mark Pearson noted.
Following the closure of the deal, Protective revealed that it plans to retain all positions associated with Mony's customer service and administrative platform in Syracuse, New York. It will also assume responsibility for servicing Mony and in-scope MLOA policies, as well as the servicing agreement with AXA Business Services.
Meanwhile, MLOA will continue to be used to write new business and will retain part of the transaction proceeds to fund its future growth.
Birmingham, Alabama-based Protective Life expects the deal to be accretive by about $0.10 to $0.15 per share to its 2013 earnings, $0.55 to $0.65 per share to its 2014 earnings and $0.65 to $0.75 per share to its 2015 earnings, all net of integration and transition costs.
"This large, high quality, seasoned book of business presents one of the most attractive acquisition opportunities we have seen in many years. This book of business, comprised primarily of life insurance policies written prior to 2004, has a limited array of product and equity market guarantees and should produce a steady and predictable stream of earnings for many years to come," Protective Chairman, President and CEO John Johns added.
PL closed Wednesday's regular trading session at $35.59, up $0.80 or 2.30% on a volume of 0.41 million shares.
by RTT Staff Writer
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