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Wilton Re announces second acquisition in a month

Bermuda-based life reinsurer Wilton Re Holdings Ltd yesterday announced an agreement to acquire Conseco Life Insurance Company from CNO Financial Group for around $237 million.

It was the second deal announced by the company in the space of a month, coming hard on the heels of an agreement to acquire the majority of CNA Financial Corporation's payout annuity business.

Yesterday, rating agency AM Best said Wilton Re's ratings would remain unchanged following the announced deals. “Both of these transactions will add to Wilton Re's liability profile while maintaining the company's longevity risk management strategy and is in line with Wilton Re's core administrative reinsurance capabilities,” AM Best stated.

Commenting on the CNO deal, Wilton Re chairman and CEO Chris Stroup said: “Wilton Re has enjoyed a long working relationship with CNO and this In Force Solution provides them with a secure exit of the company's closed block legacy business, which will free up capital and resources for redeployment to the company's strategic initiatives. Wilton Re's In Force Solutions are designed to relieve our client companies of non-strategic and low yielding businesses, so that management and their investors can focus on the fundamentals of their core business lines.”

The acquired business is primarily comprised of closed blocks of individual traditional and interest-sensitive life insurance policies and deferred annuities. Wilton Re will acquire $3.4 billion of statutory reserves in the transaction, and transfer all operations of the business to its administrative services platform after an agreed upon transition period. As part of the agreement, Bankers Life and Casualty Company, a wholly owned life insurance subsidiary, will recapture $160 million of traditional life reserves previously reinsured to Wilton Re, paying approximately $28 million.”

Mr Stroup described the CNA business to be aquired as “a seasoned block of payout annuities supported by a high quality investment portfolio”.

As part of the transaction, Wilton Re's US operating company, Wilton Reassurance Company, will acquire of 100 percent of the common stock of Continental Assurance Company (CAC), an indirect, wholly owned subsidiary of CNA.

Additionally, Wilton Re Bermuda Ltd will reinsure a block of run-off structured settlements from a Bermuda-based subsidiary of CNA. Wilton Re will acquire $2.5 billion of statutory reserves, and transfer all operations of the business to its administrative services platform.

The closing of both transactions remains subject to customary closing conditions and certain regulatory approvals, and is expected to occur in the second quarter of 2014.

AM Best said it “expects Wilton Re to remain adequately capitalised as these transactions will be funded through excess capital deployment”.

As of September 30, 2013, Wilton Re had $8.5 billion in total assets and $120 billion of insurance in force.

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Published March 04, 2014 at 8:00 am (Updated March 03, 2014 at 9:21 pm)

Wilton Re announces second acquisition in a month

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