A.M. Best has commented that the Credit Ratings of Protective Life Corporation (Protective) (headquartered in Birmingham, AL) and its insurance subsidiaries remain unchanged following the announcement that it has entered into a reinsurance agreement to acquire approximately $12.6 billion of life and annuity liabilities of Liberty Life Assurance Company of Boston (Liberty Life) from Liberty Mutual Holding Company Inc.

Under the terms of the agreement, Protective (whose ultimate parent is Dai-Chi Life Holdings, Inc.) will enter into a coinsurance agreement with Liberty Life for a seasoned block of life and annuity business, using its excess capital to fund the transaction. The acquisition is part of Protective’s core business strategy as an acquirer of life insurance blocks, although A.M. Best notes that this acquisition includes structured settlement business, which is new for Protective.

While the impact to Protective’s balance sheet is material given the size of the acquired blocks, A.M. Best notes that pro forma risk-adjusted capitalization will remain supportive of Protective’s current ratings. A.M. Best expects the acquisition to add diversification and scale to Protective’s existing acquired blocks with a moderate overall increase to operating earnings. The transaction is expected to close in the second quarter of 2018, pending regulatory approval and other customary closing conditions and is part of a broader transaction whereby Liberty Life is being purchased by Lincoln National Corporation, which will retain Liberty Life’s group business.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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