European life assurance group Life Company Consolidation Group (LCCG) has agreed to acquire Equitable Life Assurance Society (Equitable Life) for £1.8bn.
Under the deal, Equitable Life and all of its business will be transferred to Reliance Life, a specialist UK run-off manager established by LCCG.
As per the proposed deal, Equitable Life’s policies will be transfer to Reliance Life under Part VII transfer, expected to be completed by the end of next year.
As part of the transfer process, ‘with profits’ policies will convert to ‘unit linked’ funds. This is expected to be beneficial in increasing its current 35% capital distribution to a level expected to be between 60% and 70%.
The transfer process is claimed to provide policyholders with access to a broad range of funds and can secure Equitable’s future.
This is the latest transaction for LCCG, where it plans to acquire open and closed book insurance assets in the UK and Europe.
LCCG’s operations in the UK, Republic of Ireland and the Isle of Man, have previously acquired tend businesses, including from Aviva, AXA and Generali. Total policyholder assets of the LCCG group are currently around £24bn and predominantly unit-linked.
LCCG Group CEO Paul Thompson said: “We are delighted to have been selected by Equitable Life to be its partner in providing on-going service, fund choice and security to its policyholders. As a group we have significant experience in delivering policyholder value through well-managed run-off processes and our expertise in unit linked assets. We continue to see significant opportunities to add to our run-off assets through additional closed book life insurance transactions.”
The transaction is expected to maximise capital distribution to members while managing the administrative costs of life insurance business in run-off.
Equitable Life chairman Ian Brimecome said: “While it will be sad to bring an end to the oldest mutual assurer in the world, the potential to enhance with-profits policy values to the extent made possible by a transfer to Reliance Life is fundamentally helpful in distributing capital to our policyholders as fairly and as soon as possible.”