Iowa’s chief insurance regulator approved the $3.8 billion purchase of the Iowa-domesticated life and reinsurance subsidiaries of Symetra Financial after a determination that the purchase would not lead to market disruption.
The Dec. 30 approval was announced after Sumitomo Life Insurance Co. managers testified that the Symetra Financial subsidiaries would continue writing insurance policies in the states in which the companies are licensed. The deal will have no material effect on the Iowa insurance market, they said.
Iowa market share held by the subsidiaries of Delaware-based Symetra Financial in 2014 was 0.12 percent of life insurance premiums, 0.31 percent of annuity considerations and 0.23 percent of accident and health insurance premiums, according to a statement from the Iowa insurance commissioner’s office.
Symetra developed strong distribution relationships with local banks through which to sell life and annuity products.
“The Commissioner finds that the Applicant’s acquisition of control of Symetra is not likely to be hazardous or prejudicial to the insurance-buying public,” wrote Insurance Commissioner Nick Gerhart, in a nine-page order.
Sumitomo managers testified that they had no intention of changing Symetra’s business practices and that “most, if not all, of current executives and employees of Symetra” will remain in their positions.
Approval for the Symetra acquisition had to meet six regulatory criteria and the purchase was expected to yield little or no regulatory resistance.
Sumitomo, a mutual insurer with $228 billion in assets and $197 billion in policy reserves, is one of several Japanese insurers that have bought U.S.-based carriers.
The Symetra Financial transaction, announced Aug. 11, followed the July announcement that Meiji Yasuda Life Insurance Co. would buy Portland, Ore.-based StanCorp Financial Group in a deal valued at $5 billion.
Last June, Dai-ichi Life Insurance Co. announced it would buy Birmingham, Ala.-based Protective Life Corp. as part of a deal valued at $5.5 billion.
Analysts last summer, in comments to media outlets, said the Japanese insurer moves into the U.S. make sense as Japanese life insurance companies with excess capital look to grow by tapping into the world’s largest insurance market.
Japan’s growth has plateaued for several years and China’s slowing economy has led to broad market selloffs in recent days and also in August.
In the U.S., the Federal Reserve’s quarter-point rise in a benchmark lending rate last month will make life and annuity products more attractive to policyholders and also mean insurance carriers earn more on their fixed-income investments.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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