Great-West Life & Annuity Insurance Co. has agreed to sell the bulk of its individual life insurance and annuity business to Protective Life Insurance Co. for an estimated $1.2 billion, via a reinsurance transaction, according to a company announcement Thursday.
The deal, expected to close in the first half of 2019, will see Protective assume the liabilities and administration of insurance policies under the Great-West Financial brand.
Great-West is selling its single-premium life insurance, individual annuities, and closed-block life insurance and annuities, as well as bank- and corporate-owned life insurance. Officials did not quantify the total amount of annuity and life insurance assets being transferred, but said the business delivered $95 million in net earnings to Great-West last year through the third quarter.
After a strategic review, the company decided to focus on other areas such as retirement and investments, where there's more opportunity to grow, company officials said. Great-West's parent company, Canada-based Power Financial Corp., owns retirement-plan record keeper Empower Retirement in addition to Putnam Investments and Great-West Investments.
"We will continue to focus on Empower Retirement and seize the opportunity to further advance our leadership position in the expansive retirement services market," said Robert Reynolds, president and CEO of Great-West Lifeco U.S.
Great-West is retaining a "small" block of life insurance policies, which will be administered by Protective, the company said. Retirement-plan insurance products such as stable-value funds, guaranteed fixed-account products and in-plan annuity options are not affected by the transaction.
In 2017, overall industry annuity sales hit their lowest level in 16 years, at $203.5 billion, according to the most recent annual data from Limra, an insurance industry group. Great-West was the No. 17 seller of variable annuities last year through the third quarter, with $679 million in sales.
There have been other notable insurance transactions within the past year or so. Voya Financial Inc., for example, sold off more than $50 billion worth of annuities to three private-equity firms last year. That business is housed within a company called Venerable Holdings Inc. The Hartford Financial Services Group sold off roughly $48 billion of annuity contracts to a group of six investors.
Moody's Investors Services said in a research note late last year that it expects the trend of life insurers selling off legacy blocks of business to continue, given favorable economic conditions such as rising interest rates and a sizable inventory of legacy businesses.