Marking its exit from the US
life insurance market, Royal Bank of Canada (RBC), Canada’s biggest
bank by assets, has agreed to sell its US unit Liberty Life
Insurance (LLI) to Athene Holding for $628.1m.

RBC expects the transaction
will result in a loss of about $115m under generally accepted
Canadian accounting principles on both a pre- and after-tax
basis.

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Athene Holding is the parent
company of Athene Life Re, a Bermuda-based reinsurer focused on the
retirement services market, and Athene Life, an Indiana-domiciled
US life insurance company focused on institutional funding through
guaranteed investment contracts (GIC).

GICs are issued by insurers
and are similar to certificates of deposit issued by banks, in that
investors receive their principal plus an investment yield at
maturity.

Under the terms of the deal,
LLI will, upon closure, immediately reinsure its life and health
insurance business to US insurer Protective Life, and annuities to
Athene Life. Protective estimates that the initial capital it will
have to invest is about $310m, including a ceding commission paid
to LLI.

Commenting on the acquisition
of LLI, Athene Holding chairman and CEO James Belardi said the
acquisition was “a major step” in growing Athene Holding’s fixed
annuity business. Liberty Life has a $2.8bn block of fixed
annuities and insurance licenses in 49 states.

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Belardi, who was formerly president of American
International Group’s SunAmerica Life Insurance Company and
executive vice-president of AIG Retirement Services, founded Athene
Holding in 2009 with the backing of a group of institutional
investors.