Protective Life’s Second-Quarter Profit Up 4.6% as It Prepares to Be Acquired by Dai-ichi Life
August 8, 2014 by Best's News Service
BIRMINGHAM, Ala. – Protective Life Corp.’s second-quarter 2014 profit rose 4.6% as the Birmingham, Alabama-based life insurer readies to be acquired by Japan’s Dai-ichi Life Insurance Co. Ltd. later this year or early next.
Net income for Protective Life increased to nearly $108 million.
In June, Dai-ichi Life Insurance Co. Ltd. said it agreed to acquire Protective for $5.7 billion as part of the Japanese life insurance group’s international expansion strategy. The acquisition will be executed by merging Protective Life and DL Investment (Delaware) Inc., a 100% owned subsidiary of Dai-ichi Life established in the United States for the purpose of the acquisition (Best’s News Service, June 4, 2014)
The transaction is progressing as expected and it continues to expect closing in late 2014 or early 2015, Protective Life said in a statement. Completion of the merger needs approval by its shareholders and regulatory approvals in Japan and the United States.
On July 25, the waiting period under the Hart-Scott-Rodino Antitrust improvements Act of 1976, as amended, terminated, under a grant of early termination by the Federal Trade Commission, Protective Life said. The company expects to file its definitive proxy statement about the transaction this month. The date of the shareholder meeting for voting on the transaction will be announced at that time, it said.
In Protective Life’s acquisitions business, second-quarter pretax operating income jumped to $64.9 million from $29.4 million, primarily due to the MONY acquisition, which added $31.2 million in operating income.
Last October, Protective Life Insurance Co. completed its acquisition of MONY Life Insurance Co. and reinsured certain policies of MONY Life Insurance Company of America for a total price of $1.06 billion.
In Protective’s annuities business, pretax operating income for variable annuities increased to $34.4 million from $23.8 million last year on a $7.4 million increase in revenue driven by higher fees on policies and other income associated with the growth in account balances and lower amortization of deferred acquisition costs.
However, annuity sales declined sharply to $440.9 million from $857 million last year. Sales of stock-market-linked variable annuities declined to $227.3 million from $718.9 million.
Pre-tax operating income for Protective’s life marketing business rose to $26.3 million, up $1.7 million last year, due partly to $1.8 million in lower reinsurance settlement costs. Sales of life insurance, however, dropped 26% to $32.8 million but were up 16% from the first quarter of this year.
Protective Life Group is the 28th-largest U.S. life insurer out of a list of the top 200 based on 2013 total admitted assets of $54.4 billion, according to A.M. Best Co.
Protective Life Insurance Co. currently has a Best’s Financial Strength Rating of A+ (Superior).
On the afternoon of Aug. 5, Protective Life Corp.’s (NYSE: PL) stock was trading at $69.41 a share, down 0.01% from the previous close.
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
