Pacific Life Insurance Co. is moving downstream in the term life insurance market to less affluent investors through an acquisition of Genworth Financial Inc.'s technology platform for new term-insurance business.
Completion of the deal, announced Friday, gives Pacific Life broader market reach because the platform can be used to sell a term life product both direct to a consumer or through a financial adviser, according to spokesman Tennyson Oyler.
The companies didn't disclose terms of the deal.
Term life represents about 2.5% of Pacific Life's total life insurance business.
“This opens up the mass market to us without impacting our core focus and processes around highly affluent customers that use financial advisers,” Mr. Oyler said in an e-mailed statement.
Reports as early as April this year noted Pacific Life and Genworth were
in talks on a potential deal. The new term life business will be located in Lynchburg, Va.
Pacific Life is developing a lower-cost term insurance product to begin distribution over its new platform sometime in the fourth quarter.
Moving down to the middle market is “a positive” for Pacific Life, according to Tana Higman, director in Fitch Ratings' insurance group. The insurer has historically focused on distributing whole life and universal life insurance products to affluent clients, Ms. Higman said.
Buying the Genworth platform enables Pacific Life to launch the product more quickly, she added. The deal fits with Genworth's announcement earlier this year that it would
suspend sales in traditional life insurance and fixed annuity products in order to narrow the firm's commercial focus and double down on its long-term-care business.
Because Genworth isn't writing new life insurance business, the platform sale is a way for the firm to monetize extraneous assets, Ms. Higman said.
