Insurance: Royal Bank of Canada sells USA life insurance arm
Royal Bank of Canada has announced that Athene Holding Ltd. has agreed to acquire Liberty Life Insurance Company, the U.S. life insurance business of RBC Insurance for USD628.1 million.
The transaction is subject to regulatory approvals and customary closing conditions, and is expected to complete in early 2011. RBC expects that the transaction will result in a loss of approximately USD115 million under Canadian generally accepted accounting principles (GAAP) on both a pre and after tax basis.
Immediately following the completion of the acquisition, Liberty Life will re-insure its life and health insurance business to Birmingham, Alabama-based Protective Life Insurance Company and a portion of its annuities to Athene Life Re Ltd., a Bermuda based subsidiary of Athene Holding Ltd.
In its U.S. GAAP reconciliation, RBC expects to show that the transaction will result in a loss of approximately USD405 million on both a pre and after tax basis. The variation between the Canadian and U.S. GAAP loss amounts is largely attributable to accounting differences in the valuation of actuarial liabilities.
The amounts of the Canadian GAAP and U.S. GAAP losses are based on current estimates and are subject to change.
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