SunAmerica Inc.'s wholly owned subsidiary, SunAmerica Life Insurance Co., will acquire the annuity business of John Alden Financial Corp. for about $240 million in cash, the companies announced Monday.
The sale is part of Miami-based John Alden's plan to focus on its health insurance business.
With the purchase, SunAmerica would have about $42 billion of assets, including $29 billion on its balance sheet, more than $2 billion managed in mutual funds and private accounts, and $11 billion in retirement trust accounts.
The deal would include the previously announced sale of about $5 billion of annuity reserves, including about $3.7 billion of reserves from John Alden Life Insurance Co. under a reinsurance contract.
SunAmerica would also buy John Alden Life Insurance Co. of New York, which had about $1.3 billion of annuity reserves and $71 million of adjusted capital and surplus as of Sept. 30.
"This transaction is in keeping with SunAmerica's strategy to enhance our dynamic internal growth with complementary acquisitions," said Eli Broad, chairman and chief executive of SunAmerica.
"This acquisition will increase our annuity reserves from $16 billion to $21 billion, giving us greater critical mass and lowering our unit operating costs."
Los Angeles-based SunAmerica said it expects the deal to boost earnings immediately.
"We made a decision earlier this year to focus the company's resources exclusively on our health-care lines," said John Alden Chairman Glendon E. Johnson.
SunAmerica's stock fell 50 cents to close at $41.75, while John Alden dropped 37.5 cents to close at $17.25. Both trade on the New York Stock Exchange.
Miami-based John Alden said it expects to post a net deferred gain of about $45 million from the sale and the company's previously announced intention to sell its credit operations. The net deferred gain would be recognized as income as SunAmerica completes the assumption of policyholder liabilities, it said.