Protective to Intensify Deal Hunt With Dai-Ichi’s Backing

John D. Johns built Protective Life Corp. (PL) through acquisitions. Now, as Dai-ichi Life Insurance Co. (8750) prepares to take over his firm to establish a U.S. foothold, Johns will get support from Japan’s second-largest life insurer to accelerate the pace of deals.

“We have ambitious plans,” Johns said by phone from the insurer’s headquarters in Birmingham, Alabama. “And we see support from Dai-ichi as only upping our game.”

The combined insurer will be the 13th-largest in the world, with total assets of more than $420 billion, according to a statement from the two firms. Johns and his management team will stay on to lead Protective as part of the $5.7 billion deal announced yesterday.

Among Protective’s largest purchases were a $1.1 billion deal last year for policies from Axa SA and the $1.2 billion acquisition of insurance units from JPMorgan Chase & Co. in 2006. In all, the firm has bought more than 40 smaller companies and blocks of life policies.

Dai-ichi will provide “another source of funding to back those deals once additional opportunities come up,” Dan Bergman, an analyst at UBS AG, said in an interview before the Protective agreement was announced. “Historically they’ve largely relied on internal excess capital generation.”

Insurers like Paris-based Axa divest bundles of life policies to free up funds for expanding other parts of their businesses. Low interest rates have pressured the returns insurers can generate from investing the funds that back life obligations.

‘Strategic Investing’

Dai-ichi will pay $70 per share for Protective, 34 percent more than the close on May 30, before speculation on the deal was reported. That means Johns helped more than double Protective’s shares since taking the CEO post at the beginning of 2002.

The stock gained 18 percent to $69.36 yesterday in New York. The insurer has advanced 82 percent in the past 12 months.

Protective will also benefit from Dai-ichi’s backing as it pursues organic growth in the U.S., Johns said. The company was the No. 28 U.S. life insurer by assets at the end of 2013, according to data from A.M. Best.

“They really understand the importance of long term thinking and strategic investing,” Johns said of his acquirer. “We will be the growth platform for Dai-ichi here.”

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editors responsible for this story: Dan Kraut at dkraut2@bloomberg.net Dan Reichl

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.