XL Group Plc agreed to sell about 290,000 life insurance policies at a loss to Reinsurance Group of America Inc. as Chief Executive Officer Mike McGavick narrows his company’s focus to property & casualty coverage after buying Catlin Group Ltd.
The deal represents about $22 billion of insurance in force, according to a statement Wednesday from Chesterfield, Missouri-based RGA that didn’t disclose terms. XL expects to record a net loss of about $34 million tied to the transaction, the Dublin-based company said in a separate statement.
McGavick agreed last year to sell its life reinsurance business for $570 million in cash to GreyCastle Holdings Ltd., a company in Bermuda whose shareholders include family offices and university endowments. XL has been shifting its business mix, selling a stake in a home insurer to Progressive Corp. this year and buying Catlin for about $4 billion to expand offerings of specialized commercial coverage.
“This transaction will remove the vast majority of risk associated with our remaining run-off life exposures,” McGavick said. “Over the past few years, through a series of strategic steps, we have made XL Catlin a stronger and more disciplined company focused on our core property & casualty operations.”
RGA has been striking deals with companies including Voya Financial Inc. and Swiss Re AG that have been seeking to offload life policies and units. The reinsurer said last month that dealmaker Anna Manning would replace Greig Woodring as CEO in late 2016 when he plans to retire.
“Our deep expertise and understanding of the life reinsurance market has provided us with the tools to secure an innovative solution for XL,” Manning said in the statement.
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