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Liberty Mutual Sells Life Insurance Division to Lincoln Financial for $3.3 Billion

by Precise Leads

February 6, 2018

As it seeks to realign its P&C business, Liberty Mutual sells its life insurance division to Lincoln Financial.

In a deal that enables each company to sharpen their focus on different segments of the insurance industry, Liberty Mutual has agreed to sell its life insurance unit to Lincoln Financial Group for $3.3 billion.

After selling its group disability, group life, individual life, and annuity products division, Liberty Mutual will shift its core business to property and casualty insurance. For its part, Lincoln’s acquisition of Liberty’s group benefits business will make the firm the industry’s leading group benefits insurer.

Lincoln also announced that it will reinsure Liberty’s individual life and annuity lines with Protective Life Insurance Co., a division of Dai-ichi Life Holdings, for $1.17 billion. The company will finance the deal with a combination of cash and debt, and it expects the acquisition to add to its earnings per share in 2019. The deal is scheduled to close in the second quarter.

Liberty to Reorganize P&C Business

The deal paves the way for Liberty Mutual to reorganize its commercial and consumer P&C businesses into two separate units: Global Risk Solutions (GRS) and Global Retail Markets (GRM). Roped within the GRS division will be Liberty’s specialty insurer, Ironshore, National Insurance, and Global Reinsurance Strategy Group.

Last year, Liberty Mutual acquired Ironshore for $3 billion, which gave the company a global specialty insurance business with roughly $6.5 billion in net written premiums. At the time of the purchase, Liberty Mutual said that merging its U. S. underwriting business with Ironshore made it the sixth largest underwriter of excess and surplus lines in the U. S. based on 2016 direct written premiums.

The GRM unit will blend Liberty’s consumer market offerings with its business insurance, accident and health (A&H) insurance lines, which were previously part of the company’s commercial insurance division. This division will bring consumers auto, property, and A&H products while offering commercial coverage for small businesses.

In a statement announcing the sale, Liberty Mutual Chairman and CEO David H. Long said that realigning the company will “make it easier for our customers to access the full breadth of the personal, commercial, specialty and reinsurance products that Liberty has to offer.”

Lincoln Becomes Group Benefits Leader

Lincoln Financial believes that the transaction will strengthen its presence in the employer sales market, where it claims to have access to 10 million insureds. Its menu of products will feature life, disability, dental, vision, critical illness, and accident insurance.

According to the company, the acquisition of Liberty’s group benefits business will push its market share in the fully insured disability sales market to 14%, making it the largest in that sector. In the combined life and fully insured disability sales market, it will take third place.

Dennis R. Glass, Lincoln Financial’s President and CEO, said in a statement that the acquisition reinforces the firm’s expertise in disability insurance and “aligns with our strategic priority of diversifying our sources of earnings and effectively deploying capital.”

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