Before it's a done deal, the acquisition of Lincoln Benefit Life has to pass through the Nebraska Department of Insurance.
Allstate announced recently it would sell the 75-year-old local company to Resolution Life Holdings Inc., a British-owned company registered in Delaware, for $600 million. They said the deal was expected to close later this year.
But there are a variety of conditions that have to be satisfied under the law, and Christine Neighbors, the department's deputy director and general counsel, said it will have to hire outside help because of the complexity of the transaction.
A hearing is scheduled within 30 days of the filing, assuming the application is in order.
A spokesman for the buyer, who says it is in a "quiet period" required of companies raising money from investors, acknowledged Resolution Life Holdings expects to file for approval of the sale this month.
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That deal is complicated not least by the apparent business plan: to quit selling life policies and "run off" the business over time, making money off the management and investment of assets. This is what other companies owned by Clive Cowdery have done in Britain, and it appears to be what will happen in the United States. Lincoln Benefit Life is the company's first acquisition here.
That plan suggests fewer employees will be necessary than the 800 or so believed to be at Lincoln Benefit Life's campus now, some working for Allstate. Employees said 80 of them were told they will lose their jobs in less than a month. Allstate has not commented on whether it has given personnel notice.
Under the law, the director of insurance has to judge acquisitions on several grounds: whether the acquirer would be able to do the business intended; whether the acquisition would reduce competition; the financial condition of any acquiring party; whether the acquirer's plans "to make any other material change in its business or corporate structure of management are unfair and unreasonable to policyholders of the insurer and not in the public interest"; the competence, experience, and integrity of those who would control the operation; and whether "the acquisition is likely to be hazardous or prejudicial to the public."
The primary interest to be served is that of the policyholders, Neighbors said.
At least one insurance industry consultant thinks the acquisition is a really bad idea for some of those who have an interest.
Bobby Samuelson publishes The Life Product Review, a website that requires a subscription fee for access and says it provides independent and objective life insurance product intelligence and opinion. He is a consultant to life insurers.
He declined to discuss a bylined essay his website published on the proposed sale of Lincoln Benefit Life, which another party made available to the Journal Star. The material on his website is copyrighted and subscribers are forbidden from redistributing the information.
In that essay, he referred to companies that acquire life insurers to "run off" a book of business as "vultures."
"Make no mistake about it — this is the worst of all possible outcomes for Lincoln Benefit Life, its home city of Lincoln, its policyholders and the agents who wrote the substantial amount of LBL business," Samuelson wrote.
In its announcement, Allstate said, "Resolution Life has a long-term view of the market and is committed to retaining in-force customers and providing excellent customer experiences and support."
Samuelson expects otherwise. "All of the incentives for Resolution point to providing as little service as possible," he wrote. "Lapses are incredibly profitable on term and guaranteed (Universal Life) products. ... I could be wrong, and these Resolution folks might want to build a high-quality, high-service franchise. But I don't think we'll really know the answer to that for at least five years."
In fact, as Samuelson acknowledged, little is known about Resolution Life Holdings. There is no Resolution website, no ratings, no filings yet.
Allstate's own announcement told why it was getting rid of Lincoln Benefit Life: its returns were about 1 percent on reserves. It's losing about $500 million on the deal, but it's freeing up $1 billion in capital.
In his essay, Samuelson suggests Lincoln Benefit Life and the United States represent a new opportunity for Cowdery, the British owner of Resolution, to integrate assets, cut costs and resell them, as he did in Britain.
"His career is going to be shorter than the average life insurance policy — hardly the 'long-term view' touted by Allstate," Samuelson wrote. "He made his fortune by selling what he built and it's a safe bet to say that he's planning to do that again with his U.S. acquisition.
"But what of the LBL brand name? Resolution intends to wholly and irreversibly transform LBL into merely a block of business. ... Blocks of business can be sold and reshuffled at will, just like any other investment. LBL is likely destined to roam until it disintegrates. Resolution now owns a sellable asset that will always be open to another bidder. Who will own the Lincoln Benefit Life block after 40 years? I have no idea and Resolution doesn't either. But I think it's a safe bet to say there's a high probability that it won't be Resolution."