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Resolution Life Holdings Inc. and its affiliates plan to engage in a series of transactions at and around the closing of their pending $600 million acquisition of Lincoln Benefit Life Co. from Allstate Corp. that set the stage for the target's payment of a substantial extraordinary dividend, according to a regulatory filing.
Through the financing of a portion of Lincoln Benefit Life's statutory reserves associated with universal life business with no-lapse guarantees, or AXXX reserves as they are commonly known, and level-premium term life business, or XXX reserves, as well as two reinsurance transactions with Hannover Life Reassurance Co. of America, Resolution Life projected in a Form A filed with the Nebraska Department of Insurance that approximately $144 million in excess capital relative to the targeted company-action-level risk-based capital ratio of 350% will be available for payment in the form of a dividend at the time of the deal's completion.
Dated Aug. 14 and made public Nov. 15 by the Nebraska regulator at SNL Financial's request, the Form A includes as exhibits copies of the purchase agreement, various related agreements between Resolution Life and Allstate, three-year financial projections regarding Lincoln Benefit Life for fiscal years 2014 through 2016, and certain other materials.
Resolution Life declared in the Form A that it proposed to finance the AXXX and XXX business in an initial, estimated amount of $513 million through a reinsurance agreement on a coinsurance with funds withheld basis with a to-be-formed, Nebraska-domiciled, special-purpose financial captive insurer that will become a Lincoln Benefit Life subsidiary. The captive will issue surplus notes to a newly formed limited liability company in exchange for senior notes the latter entity will issue. The maximum size of the AXXX/XXX facility is $1.28 billion, Resolution Life said.
The company plans to make a separate filing with the Nebraska regulator regarding various agreements associated with the AXXX and XXX financing. It plans to ask for regulatory approval to permit Lincoln Benefit Life to report the captive as an admitted asset at a value...