What the Sale of Great-West Life Signals for the Future of Institutional Life Insurance

Among the solutions the executive benefits team offers organizations for informally funding nonqualified retirement plans is the design of institutionally priced corporate owned life insurance (COLI) and bank owned life insurance (BOLI). Although a high percentage of Fortune 500 companies rely on COLI or BOLI products to tax-efficiently fund liabilities, there are a limited number of large, established insurers in the business of providing institutional life insurance.

When significant change occurs related to any one of these carriers, the Executive Benefits Team at OneDigital monitors the event closely, apprising our clients and our peers of updates as they become available.

On Thursday, January 24, 2019, Great-West Life & Annuity Insurance Company (GWL&A) announced it had reached an agreement to sell through reinsurance, substantially all its individual life insurance and annuity business to Protective Life Insurance Company, the primary subsidiary of Protective Life Corporation (Protective).

Protective is a wholly owned U.S. subsidiary of Dai-ichi Life Holdings, Inc. and is headquartered in Birmingham, Alabama.

The transaction, which is expected to close in the first half of 2019 subject to regulatory approvals and customary closing conditions, includes transfer of the following categories of business that are marketed under the Great-West Financial brand:

• Bank owned and corporate owned life insurance
• Single premium life insurance
• Individual annuities and closed block life insurance and annuities

GWL&A will retain a small block of participating life insurance policies which will be administered by Protective following the close of the transaction.

Robert L. Reynolds, Chief Executive Officer of GWL&A, said, “The combined strength of the businesses built by Great-West and Protective creates new opportunities for our customers and distribution partners who will now be very well served by Protective. Our team is committed to ensuring a seamless transition to Protective for our customers who will continue to benefit from the product solutions we’ve developed to meet their needs.”

Larry J. Rybka is the Chief Executive Officer of Valmark Financial Group. Larry recently spoke with Richard Bielen, President of Protective Life, who observed that Protective Life would typically look at as many as ten opportunities or acquisitions before making the decision to go forward with one.

“I see this acquisition,” observed Larry, “as very positive for Great-West policyholders and for viable ongoing life insurance companies, which subsequently will get more business.

“For 20 years, Protective Life has developed expertise around acquisitions and has done far more than many other companies. With this transaction, they pick up some new business lines at what appears to be a competitive price. And when people ask me ‘who will be the life insurance companies of the future,’ I always think they will be carriers like Protective Life that carefully deploy capital and takeover select blocks of business like this and then expand.”