Regulatory Pressures Lead to Major Reinsurance Agreement
Dai-ichi Life Holdings Inc. announced on March 11, 2025, that its US subsidiary, Protective Life Corporation, has entered into a significant reinsurance agreement with Resolution Life Group Holdings Ltd. The deal, valued at approximately US$9.7 billion, will see Protective Life cede a substantial portion of its policy reserves to the reinsurance firm. This strategic move is aimed at enhancing earnings and optimizing capital deployment.
The arrangement, disclosed in a statement from Dai-ichi, involves the transfer of structured settlement annuities and secondary guaranteed universal life policies, which are currently in runoff. While Protective Life will retain ownership of the assets connected to the contract, the associated income and expenditures, including investment gains and losses, will be transferred to Resolution Life. Importantly, Protective will continue to administer the policies, ensuring smooth continuity for policyholders.
According to a report in Bloomberg, Dai-ichi anticipates an improvement in its adjusted profit of approximately US$30 million to US$40 million over the medium to long term as a result of this transaction. This initiative is part of a wider trend among Japanese insurers to reduce financial strain in anticipation of new capital regulations scheduled to take effect in April 2025. These regulations are likely the primary driver behind the agreement.
“This transaction represents an important milestone, allowing us to generate capital that can be invested for continued growth,” said Rich Bielen, president and CEO of Protective Life. “We remain committed to growing life insurance sales through our valued distribution partners.”
Resolution Life, which is slated to become part of Nippon Life Insurance Co. later in 2025, views the deal as an opportunity to solidify its presence in the US market. “Our substantial capital strength and proven execution record provide a strong, long-term partner for Protective Life and its policyholders,” stated Warren Balakrishnan, CEO of US, Resolution Life. The deal is subject to customary regulatory approvals and is expected to close in 2025.
Financial advisors for the transaction included Wells Fargo representing Protective Life, and JP Morgan advising Resolution Life. Legal counsel was provided by Willkie Farr & Gallagher LLP and Debevoise & Plimpton LLP.
