Prudential Financial and Prudential Insurance Co. of America have entered into three separate transactions to sell their property and casualty business. The sales represent a combined after-tax loss of $262 million below book value, according to Moodys Investors Service.
The national property and casualty lines, except for New Jersey, are going to Liberty Mutual Group for $413 million. The New Jersey business is being sold to Palisades Group for $260 million. The company has earlier announced its decision to sell its specialty auto insurance line to Nationwide Mutual Insurance Co. for $142 million.
Moodys has affirmed its negative rating outlook on Prudential following the transaction, but notes that the sales may have a positive effect on the company. The property and casualty lines have not been as profitable as Prudentials core life insurance business, and also represent less stable earnings because of catastrophic risk.
The ratings agency had expected Prudential to sell the businesses at below-GAAP valuation because of poor operating results and a sluggish acquisitions market. However, Prudentials deals fell below Moodys expectations. "The final transaction prices including stop loss coverage and indemnification agreements were moderately less favorable than initially anticipated by Moodys," according to the company.