Resolution Life Group Holdings Ltd has entered into an agreement to acquire the in-force individual life business of Voya Financial, Inc., for a total consideration of USD 1.25 billion.
The blocks of business being divested by Voya Financial include those that the firm had previously closed to new sales and include substantially all of Voya’s individual life insurance business; fixed and variable annuities not included in Voya’s 2018 sale of its annuities business; pension risk transfer liabilities; and other similar blocks.
Included in the agreement is Security Life of Denver Insurance Company, Midwestern United Life Insurance Company and certain other affiliates, alongside the reinsurance of Voya’s remaining in-force individual life and annuity blocks. These companies will be acquired by a new holding company, Resolution Life US.
The total consideration for the acquisition includes cash of USD 902 million and retained surplus notes of USD 123 million. Furthermore, Voya will also hold a USD 225 million stake in Resolution Life.
As at June 30th, 2019 the acquired business has assets of more than USD 20 billion. Once the deal completes, Resolution Life will assume responsibility for the administration of the acquired business.
Sir Clive Cowdery, Resolution Founder and Executive Chairman of Resolution Life, commented: “The acquisition of Voya Financial’s individual life business establishes a third growth platform for Resolution Life alongside Resolution Re in Bermuda and AMP Life in Australia and New Zealand, and is an important step in delivering Resolution Life’s global strategy. We expect continued growth in the US, with the acquired business as a platform.
“This transaction is further evidence of the continuing restructuring of the life insurance sector in the US and globally. Major life insurance groups continue to reduce their exposure to legacy in-force business and to release trapped capital and resources.”
Rodney O. Martin, Jr., Chairman and CEO of Voya Financial, said: “This transaction enables Voya to realize significant value for these legacy blocks and will allow us to fully focus on our high-growth, high-return, capital-light businesses.
“It will further enable us to expand our leadership position as one of the foremost retirement, asset management and employee benefits companies in the United States, while also enabling us to generate greater value for all of our stakeholders. Voya will continue to benefit from our diverse revenue and earnings sources and will have an improved risk profile with reduced interest rate, credit and mortality risk.”
Both firms expect that almost all Voya employees that currently support the legacy life and annuity blocks in this transaction will become employees of Resolution Life US.
Voya expects the transaction to provide it with USD 1.7 billion of deployable capital, which exceeds its previously announced objective to raise at least USD 1 billion of free cash flow from the Individual Life business between 2019 and 2024.
“This transaction completes the restructuring effort that began with our initial public offering in 2013, begins a new chapter in Voya’s future, and will further distinguish Voya from its competitors as a company with a compelling business mix. We are fully committed to the growth of — and will continue to invest in — our core Retirement, Investment Management and Employee Benefits businesses, which hold leading positions in the marketplace and will enable us to help all Americans get ready to retire better,” said Martin.
The transaction is expected to close in the third-quarter of 2020, and remains subject to customary regulatory approvals and closing conditions.
