The sale of Allmerica Financial Corp.’s life insurance business will help bolster its property-casualty operations, according to Fitch Ratings.
Fitch, which put the Worcester, Mass.-based company on watch for a possible upgrade, said this will allow the company to focus on its property-casualty insurance operations and eliminate doubts about the possible cash and capital needs the variable annuity and variable life businesses could impose on the rest of the organization.
In addition, Fitch said, following the divestiture, Allmerica’s projected interest coverage, capitalization and organizational structure “support more typical notching between the company’s property-casualty subsidiaries’ IFS ratings and AFC’s long-term and debt ratings.”
Allmerica said Monday it entered into a deal to sell its variable life and annuity businesses to the New York-based Goldman Sachs Group Inc. for a sum to be determined at closing. But Allmerica projects total cash proceeds from the sale and dividend to be around $385 million.
The life business has been in run-off for the past three years.