ING Group's announcement that it has a deal to sell its Atlanta insurance subsidiary, Life Insurance Company of Georgia, to Jackson National Life Insurance Co. furthers a strategy to focus on the wealth management business within its insurance division, according to the company.
ING Group NV, a Dutch financial services giant, and Prudential PLC, the British insurer, announced Thursday that they had agreed on the purchase of Life Insurance Company of Georgia by Prudential's U.S. subsidiary, Jackson National.
The $254 million deal is expected to close in the first quarter.
Dianne Bernez, a spokeswoman for ING, said Life of Georgia "doesn't fit our wealth management strategy" but was attractive to Prudential for its strong book of business.
ING plans to focus on the wealth management side of its U.S. insurance business, she explained.
"The decision to sell the company was made following a lengthy strategic business review … that determined Life of Georgia is no longer aligned with ING's core business strategy," Fred Hubbell, a member of ING's executive board and chairman of its Insurance Americas, said in a press release. "Although Life of Georgia is no longer core for our company, it is an attractive business for Jackson National as a result of its distribution, a large and loyal customer base, and stable earnings."
ING bought Life of Georgia in 1979. It has about 1.6 million life insurance policies and annuity contracts and life insurance and annuity premium of $150 million.
Tim Padot, a spokesman for Jackson National, which is based in Lansing, Mich., said the deal would help increase the size of its life insurance business, diversify its earnings, and create a larger distribution network.
The Georgia company is attractive because it "bolts onto our existing business fairly easily," he said, adding, "It's the right fit at the right scale, and it's a profitable business."
Mr. Padot said Jackson National has not established sales goals yet, but he noted that the Michigan company has posted strong results this year. Jackson National nearly doubled its life insurance sales in the first nine months, to $35 million of first-year premiums.
"We continuously review our operations, and opportunistic acquisitions are a factor in that," said Mr. Padot. "We also want to grow organically and have brought on full-time life wholesalers."
Clark Manning, Jackson National's president and chief executive officer, said in the press release, "Increasing the scale of our life business will lower the unit cost within that product line and further diversify our earnings by increasing the percentage of income we receive from underwriting activities in relation to our current spread- and fee-based businesses."
With more than $60 billion of assets, Jackson National is a seller of fixed, indexed, and variable annuities. It is a big player in the bank-annuity market. It also sells separately managed accounts, life insurance, and institutional products. The company markets its products in 49 states through independent and regional broker-dealers, financial institutions, independent insurance agents, and registered investment advisers.
Life of Georgia has about 570 employees who will be affected by the sale, said Ms. Bernez, and 380 of these are field agents in Florida, Georgia, North Carolina, South Carolina, Tennessee, and Virginia. She said she expects Jackson National to retain 125 to 150 of the agents.
Jackson National expects a transition period of six to 12 months, Mr. Padot said.
Standard & Poor's revised its ratings outlook on Life of Georgia Thursday to "positive" from "stable," taking into account the support implied by Prudential's decision to buy it.
