SunAmerica to Buy Ford Unit : Insurance: The planned $172.5-million purchase of Ford Life is part of the Los Angeles company’s expansion plans.
SunAmerica Inc. agreed to buy Ford Motor Co.’s life insurance unit for $172.5 million in an effort to continue its rapid growth in the annuity business.
Ford Life Insurance Co. has about 100,000 annuity policies in effect, representing $3 billion in reserves. Ford Life would keep its health insurance and accident insurance operations. The transaction is expected to be completed early next year and is subject to regulatory approvals.
Los Angeles-based insurer SunAmerica has been boosting its life insurance business largely through acquisitions. Earlier this year, it paid about $120 million to acquire CalFarm Life Insurance Co. from Zenith National Life Insurance.
“We think this is going to have a very positive impact on the bottom line at an early stage,” SunAmerica Vice President Karel Carnohan said of Ford Life.
SunAmerica reported net income of $190 million for the fiscal year ended Sept. 30, or $3.18 a share after a 3-for-2 stock split effective today, compared to $165 million, or $2.61 a share, in the year-earlier period.
The company, which sold $250 million in preferred stock last month, has said it plans to grow through acquisitions as well as by expanding its network of independent brokers and dealers.
Analysts have estimated SunAmerica has $600 million to $1 billion in funds that can be used for acquisitions.
SunAmerica shares eased 62.5 cents to $44.875 on the New York Stock Exchange.
The proposed sale of Ford Life, a unit of Ford Motor Credit Corp., is part of Ford’s plans to sell some of its non-automotive businesses and would not have a significant effect on Ford’s finances, analysts say.
“The new Taurus is estimated to have cost $2.8 billion, so that $172.5 million would have paid for the steering wheel,” said Scott Sprinzen, an analyst with Standard & Poor’s Corp. “It is not a material amount that will have any bearing on Ford’s financial position.”
A spokesman for Ford Life said the company does not plan to sell any more of the business. The Dearborn, Mich.-based auto maker said last month that it planned to sell part of its Associates and USL Capital Corp. finance subsidiaries.
