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Protective Life Insurance completes merger of captive insurance companies

Protective Life Insurance Co. has merged its special purpose financial captive insurance companies into one entity, Golden Gate Captive Insurance Co., effective Oct. 1.

The companies are comprised of Golden Gate Captive Insurance, Golden Gate II Captive Insurance Co., Golden Gate III Vermont Captive Insurance Co., Golden Gate IV Vermont Captive Insurance Co. and Golden Gate V Captive Insurance Co. The move is part of Protective Life's efforts to consolidate its reserve financing structure and reduce related financial and operational costs.

Following the merger, Golden Gate entered into a 20-year transaction with Hannover Life Reassurance Co. of America (Bermuda) Ltd., Canada Life Assurance Co. and RGA Reinsurance Co. (Barbados) Ltd. to finance up to $5 billion of XXX and AXXX reserves related to term life insurance and universal life insurance reinsured by Protective Life and West Coast Life. The transaction may extend to up to 25 years.

Golden Gate on Oct. 1 terminated its financing facility with Steel City LLC that the companies used to financed reserves related to a block of term life insurance and other term life insurance reinsured by Protective Life and its wholly owned subsidiary, West Coast Life Insurance Co.

The termination also includes the redemption of the Steel City's notes issued to Golden Gate and Golden Gate's surplus note issued to Steel City.

Golden Gate II redeemed in full its floating rate surplus notes due July 15, 2052, which it used to fund certain of its AXXX reserves. The notes were sold to Lehman Brothers Inc. in 2007 and deposited into Delaware trusts, which issued certain securities that were also fully redeemed following the redemption of the surplus notes.

Golden Gate III and Golden Gate IV also terminated their reimbursement agreements with UBS AG Stamford Branch and the related letters of credit issued by the lender, effective Oct. 1.

The letters of credit supported certain of the companies' obligations to West Coast Life for a portion of the reserves associated with term level life insurance policies reinsured by Golden Gate III and Golden Gate IV.

Golden Gate V terminated its financing facility with Red Mountain LLC that the companies used to fund certain AXXX reserves related to a block of universal life insurance policies with secondary guarantees from Protective Life and West Coast Life. The termination also includes the redemption of Red Mountain's notes issued to Golden Gate V and Golden Gate V's non-recourse funding obligation issued to Red Mountain.