Protective Life Corporation (NYSE:PL) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry Into a Material Definitive Agreement
On May 31, 2019, Protective Life Corporation (Protective) entered into a Term Loan Credit Agreement (the Credit Agreement) with the several lenders from time to time party thereto and Mizuho Bank, Ltd., as administrative agent (the Administrative Agent), to provide for a $600 million five-year unsecured term loan credit facility (the New Credit Facility), which may be borrowed in a single disbursement.
Borrowings made available under the New Credit Facility may be used for general corporate purposes and working capital purposes. Borrowings under the New Credit Facility must be repaid by May 31, 2024. As of the date of this filing no borrowing has been made.
Term loan credit borrowings under the New Credit Facility will bear interest at a rate equal to, at the option of Protective, (i) the London Interbank Offered Rate (LIBOR), for the applicable period, plus a spread based on the ratings of Protectives senior unsecured long-term debt (Protectives Senior Debt) (currently 1.00%), or (ii) the sum of (A) a rate equal to the highest of (x) the Administrative Agents prime rate, (y) 0.50% above the Federal Funds rate, or (z) one-month LIBOR plus 1.00% and (B) a spread based on the ratings of the Protectives Senior Debt (currently 0%). The New Credit Facility also provides for a ticking fee at a rate of 0.125% per annum that is calculated on the aggregate amount of unused and available commitments under the New Credit Facility and begins to accrue on June 30, 2019.
The Credit Agreement contains, among other provisions, covenants requiring the maintenance of certain financial ratios and restricting the indebtedness that Protective and its subsidiaries can incur. Amounts due under the New Credit Facility may be accelerated upon an event of default, as defined in the Credit Agreement, such as a breach of a covenant, material inaccuracy of a representation or the occurrence of bankruptcy, if not otherwise waived or cured, among others. The Credit Agreement also contains customary representations and warranties.
From time to time, in the ordinary course of business, certain lenders and their agents (and their respective subsidiaries or affiliates) under the Credit Agreement have provided and may in the future provide, investment banking, underwriting, commercial banking, trust and other advisory services to Protective, its subsidiaries or affiliates. These parties have received, and may in the future receive, customary compensation from Protective, its subsidiaries or affiliates, for such services. In addition, certain of the lenders under the New Credit Facility or their affiliates may, from time to time, engage in transactions with or perform services for Protective in the ordinary course of business.
The foregoing description of the Credit Agreement is not complete and is qualified in its entirety by reference to the Credit Agreement, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On June 3, 2019, Protective Life Insurance Company (Protective Life), a wholly owned subsidiary of Protective, completed its previously announced acquisition (the Closing) via reinsurance of substantially all of the individual life insurance and annuity business (the Individual Life Business) of Great-West Life & Annuity Insurance Company (GWL&A), Great-West Life & Annuity Insurance Company of New York (GWL&A of NY), The Canada Life Assurance Company (CLAC) and The Great-West Life Assurance Company (GWL and, together with GWL&A, GWL&A of NY and CLAC, the Sellers).
In connection with the Closing and to the Master Transaction Agreement, dated January 23, 2019 (the Master Transaction Agreement), previously reported in our Current Report on Form 8-K filed on January 25, 2019, Protective Life and Protective Life and Annuity Insurance Company (PLAIC), a wholly owned subsidiary of Protective Life, entered into reinsurance agreements (the Reinsurance Agreements) and related ancillary documents (including administrative services agreements and transition services agreements) providing for the reinsurance and administration of the Individual Life Business.
to the Reinsurance Agreements, the Sellers ceded to Protective Life and PLAIC substantially all of the insurance policies related to the Individual Life Business on a 50% indemnity basis net of reinsurance recoveries. The aggregate ceding commission for the reinsurance of the Individual Life Business paid at the Closing was $767.6 million, which amount is subject to adjustment in accordance with the Master Transaction Agreement. All policies issued in states other than New York were ceded to Protective Life under reinsurance agreements between the applicable Seller and Protective Life, and all policies issued in New York were ceded to PLAIC under a reinsurance agreement between GWL&A of NY and PLAIC. The aggregate statutory reserves of the Sellers ceded to Protective Life and PLAIC as of the Closing were approximately $20.4 billion, which amount was based on initial estimates and is subject to adjustment following the