XL Group Selling Life Re Biz for $570M

May 1, 2014

XL Group plc owned subsidiary, XL Life Reinsurance (SAC) Ltd (XLLR), to GreyCastle Holdings Ltd. for $570 million in cash.

XL CEO Mike McGavick said the deal represents “another strong step forward in its drive to deliver top-quintile return on equity and book value growth” from core property/casualty operations of XL.

Mike McGavick, CEO XL Group
Mike McGavick, CEO XL Group

At the completion of this transaction, XLLR will reinsure the majority of XL’s life reinsurance business via 100 percent quota share reinsurance.

The transaction covers a substantial portion of XL’s life reinsurance reserves.

XL announced the run-off of its life reinsurance business in 2009.

According to XL’s announcement, the buyer, GreyCastle Holdings Ltd. is a newly-formed Bermuda company whose shareholders include large family offices and university endowments that are long-term investors.

“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, executive vice president and chief financial officer of XL, in a statement.

XL expects to complete the deal in the second quarter of 2014.

XL estimates that the March 31, 2014 pro forma effect of the transaction would be an overall reduction in U.S. GAAP book value of approximately $585 million and an estimated after-tax U.S. GAAP net loss of approximately $580 million. This estimate is subject to changes in the mark-to-market value of the underlying investment portfolio and other adjustments from March 31, 2014 through completion of the transaction.

Source: XL Group plc