A deal was recently announced where Protective Life Corp. has agreed to purchase a portfolio of old policies from AXA SA's US unit for the price of US $1.1 billion. The purpose of the Alabama based firm is to squeeze more value out of the said policies.
Under the deal, Mony Life Insurance Company, AXA SA's US unit, would transfer the policies that is expected to produce steady revenues as well as an increased earnings per share. The policies were put in place nearly ten years ago in 2004.
Mony became the US unit of AXA after a purchase of US $1.5 billion and with the deal, it would be hit with a capital loss of Eur100 million or US $131 million. This loss is attributable to the difference between purchase price of AXA and the selling price to Protective Life.
In a statement, AXA CEO Henri De Castries said, "This transaction allows us to further grow our US business where we have been achieving good momentum while freeing up capital invested in closed portfolios to improve our financial flexibility and enable additional investment in high-growth markets and businesses."
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