Protective Life spends $1 billion for MONY business

Deal includes acquisition of Axa's MONY Life Insurance, reinsuring a block of life policies.
APR 01, 2013
In a bid to enhance its earnings, Protective Life Corp. this week reached a deal with Axa Equitable Life Insurance Co. to purchase a closed block of life insurance business. On Wednesday, the carrier agreed to buy Axa's MONY Life Insurance Co. and to reinsure an in-force block of life insurance policies written by MONY Life Insurance Co. of America for $1.06 billion in cash. The deal is expected to close Oct. 1. It's a sweet deal for Protective Life. “It's an opportunity for them to use their excess capital. They're in the acquisition business, and they are specialists in buying blocks of business and putting them into runoff,” said Steven Schwartz, an analyst with Raymond James & Associates Inc. “It was an attractive price, and they get good returns [from the closed block of business].” Protective Life decided to shop for the book because it had built up significant capital in a short period of time, noted chief executive John D. Johns during a conference call yesterday. “In recent years, Protective has had a high-quality problem in that we're building up capital at a faster rate than we can prudently and sufficiently deploy it,” he said. “It's a good problem to have.” Indeed, MONY's closed book of business, which was originated mostly before 2004, was especially attractive because of its low risk. “We believe the transaction materially enhances the quality of earnings streams we report,” Mr. Johns said. “It's almost like having a time machine where you can go back in time and pick up an attractive block of policies that were designed the way they were in a different era,” he added. “That is to say, there's less risk from the standpoint of embedded derivatives and guarantees.”

Latest News

Advisor moves: Raymond James lands $1.25B team as Merrill loses two
Advisor moves: Raymond James lands $1.25B team as Merrill loses two

Iowa's Greenwood Wealth Partners exits D.M. Kelly as UBS and Ameriprise win Merrill Lynch recruits in California and Florida

Never a losing day: CFTC alleges $950 million forex Ponzi scheme
Never a losing day: CFTC alleges $950 million forex Ponzi scheme

Less than 1% of pool funds went to actual trading, CFTC says

Fintech bytes: Northwestern Mutual picks Jump for enterprise AI
Fintech bytes: Northwestern Mutual picks Jump for enterprise AI

Plus, SEIA builds a governed data foundation for its in-house AI and Snappy Kraken debuts a read-only marketing coworker for advisors.

People moves: AllianceBernstein names Onur Erzan as next CEO
People moves: AllianceBernstein names Onur Erzan as next CEO

Broadridge, Wedbush and Alaris Acquisitions have also filled senior wealth management roles with hires from J.P. Morgan, Osaic and SageView.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains