Pacific Life Sells Bank Subsidiary to Investors

February 4, 2012 by Fran Lysiak

The parent company of Pacific Life Insurance Co. has completed the sale of its subsidiary, College Savings Bank to a syndicate of investors. Terms of the deal weren’t disclosed.

College Savings is a New Jersey-chartered savings bank.

Along with the transaction, Pacific LifeCorp and its parent company, Pacific Mutual Holding Co., have both filed with the Federal Reserve Bank to complete deregistration as savings and loan holding companies, the company said. Pacific LifeCorp didn’t keep any ownership or commercial interest in the bank.

Attempts to speak to the California-based Pacific Life were unsuccessful.

Aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act place new oversight over commercial banks and thrift institutions insured by the Federal Deposit Insurance Corp., a category that includes many insurance groups.

In December, GE Capital Financial Inc. said it will acquire most of the depository business of MetLife Inc.’s bank subsidiary (Best’s News Service, Dec. 27, 2011). Under the agreement, GE Capital is to buy about $7.5 billion of the bank’s deposits, including the CDs and money market accounts.

MetLife Inc.’s bank is also exiting the business of originating traditional, or forward, residential mortgages. Last October, MetLife said it was exploring the sale of the business, citing an “uncertain marketplace and regulatory environment” (Best’s News Service, Oct. 13, 2011). That came about three months after it said it was exploring the sale of the depository business of MetLife Bank to focus on its insurance operations (Best’s News Service, July 21, 2011).

During the heart of the financial crisis of 2008, several life insurers applied for federal aid under the U.S. Treasury Department’s$250 billion Capital Purchase Program, part of the Troubled Asset Relief Program. The program was open only to federally regulated, U.S.-controlled banks, savings associations, and certain bank and savings and loan holding companies.

Ultimately, six insurers received initial approvals to participate in the Capital Purchase Program but Hartford Financial Services (NYSE: HIG) and Lincoln National (NYSE: LNC) were the only insurers to seek those funds.

Pacific Life Group was the 15th-largest U.S. life/health writer in 2010 based on total admitted assets of $102.6 billion, according to A.M. Best Co. (Best’s Review Magazine, October 2011).

Pacific Life Insurance Co. and Pacific Life & Annuity Co. each currently have a Best’s Financial Strength Rating of A+ (Superior).

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)

Originally Posted at InsuranceNewsNet on February 1, 2012 by Fran Lysiak.