Guggenheim Affiliates To Buy Industrial Alliance US Fixed Annuities

Caroline J Saucer

Industrial Alliance Insurance and Financial Services Inc. has completed an agreement to sell all its U.S. fixed annuities and accumulation riders to Security Benefit Life Insurance Co. and Equitrust Life Insurance Co., two affiliates of U.S.-based Guggenheim Partners, Industrial Alliance said.

The transaction, which represents about $800 million in contract liabilities and related assets, was carried out through the U.S. branch and the U.S. subsidiaries of Industrial Alliance, Industrial Alliance said in a statement. It was done through indemnity reinsurance and assumption reinsurance. The assets subject to the agreement have been transferred, except for a portion that is temporarily kept by the ceding entities on a funds-withheld basis.

This transaction, which Industrial Alliance said will have a favorable impact on its capital, is expected to increase its solvency ratio by eight percentage points.

This move reflects the company's decision to focus its resources in the United States on the continued development of its life insurance business. Since the acquisition of the American-Amicable platform in 2010, the company has expanded its distribution network, built market share in new territories and in 2011 achieved year-over-year organic growth of 26% in its life business, Industrial Alliance said. Going forward, its plan is to scale up the U.S. life business, reduce unit costs and increase its contribution to the profitability of Industrial Alliance.

In January, FBL Financial Group sold its EquiTrust Life Insurance Co. unit for an initial $471.4 million cash to an affiliate controlled by Guggenheim Partners (Best's News Service, Jan. 3, 2012).

Industrial Alliance Insurance & Financial Services has a current Best's Financial Strength Rating of A (Excellent).