HANOVER TO SELL LIFE RUN-OFF OPERATION TO GOLDMAN SACHS UNIT

US p/c insurer Hanover Insurance Group is to sell its First Allmerica Financial Life Insurance Company (FAFLIC) operation, which is in run-off, to Goldman Sachs unit Commonwealth Annuity and Life Insurance Co (CALICO). In connection with the deal, Hanover is expected to reinsure FAFLIC’s accident and health assumed reinsurance pool business. This has been reported as a discontinued operation since 1999 and makes up about 10% of FAFLIC’s total net insurance liabilities. The deal will result in a net after-tax loss to Hanover of about $66m. Hanover CEO Frederick Eppinger noted that the sale “completes the divestiture of our life business, which has been in run-off since 2002, which we believe will give us greater financial flexibility”. Meanwhile, Hanover has reported H1 net earnings of $48.3m, a decline of 61%, on net earned premiums of $1.24bn, up 5.3%. Underwriting income fell by 15% to $57.8m, while the combined ratio rose to 95.5% from 94.4%. The drop in earnings reflects the $66.1m FAFLIC writedown. That loss in turn resulted in a Q2 net loss of $10.2m against a year-earlier gain of $59.8m.