Meiji Yasuda Life Insurance Company has announced that its US subsidiary StanCorp Financial Group has reached a $2-bn agreement with The Allstate Corporation, a major US property and casualty insurance company.
Under the definitive agreement, StanCorp will acquire Allstate’s two subsidiaries that operate employer voluntary benefits businesses. The companies are American Heritage Life Insurance Company and American Heritage Service Company.
Subject to the approval of regulatory authorities in Japan and the US, the acquired companies will be wholly owned and consolidated subsidiaries of Meiji Yasuda.
StanCorp’s primary subsidiary Standard Insurance Company is a US life insurer that has strengths in the group insurance and retirement plan field. StanCorp has been working to expand its scale and profitability mainly in the group life and disability insurance business and the group annuity business.
The expansion of sales channels for StanCorp's products based on the acquisition of Allstate's subsidiaries is expected to have the effect of strengthening its customer base and improving business efficiency in employer voluntary benefits businesses, contributing to further growth of StanCorp.
Meiji Yasuda has positioned the overseas insurance business field as one of the driving forces behind our growth and has set a target of at least JPY100bn in base profit equivalents by the fiscal year ending 31 March 2027.
The Japanese insurance giant said, “Going forward, we will continue our efforts to expand existing businesses and explore potential investments for taking in further external growth.”
Moody’s Ratings commentary on proposed deal
In a commentary on the agreed deal, Mr Soichiro Makimoto, VP-senior credit officer at Moody’s Ratings, said, “The Meiji Yasuda Life’s proposed acquisition of American Heritage through its US subsidiary StanCorp Financial Group has limited negative credit impact on the Japanese life insurer.
“We expect a small direct impact on its strong economic solvency ratio from the deal. We also expect the deal to be funded by cash on hand, and hence, limited impact on Meiji Yasuda’s strong leverage and coverage metrics.
“On the other hand, Meiji Yasuda will improve its geographic diversification with the potential acquisition, as we expect the insurer will increase the contribution from overseas insurance and other operations to its core profit to around 19% from the current level of around 16%.”