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Aflac subsidiaries acquiring Zurich North America's group benefits business

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Aflac subsidiaries acquiring Zurich North America's group benefits business

Aflac Inc.'s insurance subsidiaries agreed to acquire Zurich North America's U.S. corporate group life and pensions business.

Zurich's group benefits platform consists of group life, disability and absence management products.

Aflac's American Family Life Assurance Co. of Columbus and American Family Life Assurance Co. of New York subsidiaries will reinsure on an indemnity basis Zurich's in-force group life and disability policies with annualized earned premium of about $115 million.

The deal is expected to close in the second half, subject to regulatory approvals and customary closing conditions. The employees of Zurich's group life and disability business will join Aflac following the transaction, while business activities are expected to continue from their current locations.

Aflac said it will also acquire assets needed to support the group life and disability business, as well as an absence management platform.

Benefit Harbor LP will transfer the assets and employees of Benefit Harbor Insurance Services, the outsourced platform supporting Zurich's group life and disability business, to Aflac. Separately, Aflac said Benefit Harbor will provide certain specialized services to group life and disability clients.

Funding for the deal, along with the required capital to support the acquired businesses, will come from capital held within Aflac's U.S. insurance companies.

The transaction and growth expenses are expected to be dilutive to Aflac's 2020 adjusted EPS by 2 cents to 3 cents. The company also expects modest run-rate dilution over the near-term as it continues to expand the platform.

Additionally, the target group life and disability business will become part of Zurich's global employee benefits solutions partner network. The move will allow Aflac to offer its employee benefit products to Zurich's global clients with a U.S. presence.

Piper Sandler & Co. was financial adviser and Sidley Austin LLP was legal adviser to Aflac. Barclays was financial adviser, and Willkie Farr & Gallagher LLP was legal adviser to Zurich.