KBRA Comments on Kuvare’s Proposed Acquisition of Lincoln Benefit Life Company

NEW YORK--()--Kroll Bond Rating Agency (KBRA) releases a comment, following Kuvare U.S. Holdings, Inc.’s (Kuvare) announcement that it has entered into an agreement to acquire Lincoln Benefit Life Company (LBL) from RL L.P. (formerly known as Resolution Life). In KBRA’s view, this transaction is in line with management’s stated acquisition strategy and complementary to the current franchise. Kuvare is the parent of Guaranty Income Life Insurance Company (GILICO), which currently carries a KBRA insurance financial strength rating (IFSR) of A- with a Stable Outlook.

LBL is a Nebraska-domiciled insurer, which has been managing a run-off block of annuities and life insurance policies since ceasing new sales through independent agents in 2014. Kuvare plans to acquire LBL, via GILICO, through an internally funded all-cash transaction, with the purchase price to approximate LBL’s book value. At year-end 2018, LBL’s reported capital and surplus was about $380 million. The company’s reserve mix is roughly one-half annuities and one-half life insurance. Pending regulatory approval and the transaction’s close (expected by year-end 2019), the to-be-acquired insurer will be a direct subsidiary of GILICO. KBRA does not rate LBL.

KBRA believes the transaction should have a neutral to slightly positive impact on GILICO’s overall credit profile. LBL brings further diversification to the group through its balanced mix of life insurance and annuities, as well as a history of statutory profitability. Additionally, there are operational synergies from the acquisition that are likely to be realized. With an admitted asset base exceeding $10 billion, LBL will add meaningful scale to the organization. This acquisition may present management with future options to reignite sales at the company, given Kuvare’s experience in multiple distribution channels. Restarting sales would involve some execution risk as reinvigorating the independent sales channel in this current highly competitive environment may be a challenge.

GILICO’s rating is based on KBRA’s Global Insurer & Insurance Holding Company Rating Methodology published on October 10, 2017.

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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical:
Andrew Edelsberg, Managing Director
(646) 731-2371
aedelsberg@kbra.com

Rob Hill, CFA, Associate
(646) 731-3183
rhill@kbra.com

Donna Halverstadt, Managing Director
(646) 731-3352
dhalverstadt@kbra.com

Contacts

Analytical:
Andrew Edelsberg, Managing Director
(646) 731-2371
aedelsberg@kbra.com

Rob Hill, CFA, Associate
(646) 731-3183
rhill@kbra.com

Donna Halverstadt, Managing Director
(646) 731-3352
dhalverstadt@kbra.com