XL Insurance (Bermuda) Ltd has entered into a definitive agreement to sell its wholly-owned subsidiary, XL Life Reinsurance (SAC) Ltd (“XLLR”), to GreyCastle Holdings Ltd. for $570 million in cash. At the completion of this transaction, XLLR will reinsure the majority of XL's life reinsurance business via 100 percent quota share reinsurance.
“While complex, as driven by the nature of our life reinsurance businesses and our objective of maximizing value for XL shareholders, the real benefit of this transaction is clear and simple: XL has now dealt with the vast majority of its life reinsurance business, and has thereby taken another strong step forward in its drive to deliver top-quintile return on equity and book value growth from its core property and casualty operations,” said Mike McGavick, the chief executive officer of XL.
“This transaction meaningfully reduces the risk profile of the company, which gives us additional flexibility to pursue capital management initiatives, including an expectation of buying back an additional $300 million of shares in 2014 over amounts previously contemplated,” said Peter Porrino, the executive vice president and chief financial officer of XL.
The transaction is expected to be completed in the second quarter of 2014 and is subject to satisfaction of regulatory conditions.
Citigroup and J.P. Morgan Securities LLC serve as the financial advisors and Clifford Chance LLP and Skadden, Arps, Slate, Meagher & Flom LLP serve as legal counsel for XL in this transaction.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].