Conseco to Buy Two Insurers In Deals Valued at $1.44 Billion
May 08, 2011
Conseco Inc., continuing to snap up insurance companies at a rapid pace as the business consolidates, announced plans for a string of purchases, including the acquisition of two insurers for a combined total of about $1.44 billion in cash and stock. Conseco, based in Carmel, Ind., said it would acquire American Travellers Corp. for about $793 million in stock. At the same time, it set an agreement to purchase Capitol American Financial Corp. about $650 million in cash and stock. In addition, Conseco said it will buy the remainder of two companies in which it already holds majority stakes. Conseco will pay $117 million in stock for the rest of Bankers Life Holding Corp. and $165 million in cash for the remaining stake of American Life Holdings Co. it does not already own. On completion of the deals, Conseco said, it will have $30 billion of assets under management. In the American Travellers deal, Conseco will swap common stock worth between $32 and $35.03 for each American Travellers share. American Travellers, based in Bensalem, Pa., is a provider of long-term care insurance. For each Capital American share, Conseco will pay $30 a share in cash and $6.50 a share in stock. Capitol American, based in Cleveland, underwrites, markets and distributes individual supplemental-health and -accident insurance. Conseco is generally known for buying mid-sized companies whose management and administrative activities can be consolidated and streamlined. Earlier this year it agreed to acquire Life Partners Group Inc. for about $600 million. Unlike some of its earlier transactions, which had hurt Conseco's credit rating, the latest batch of deals was given the blessing of Standard & Poor's Inc.. S&P raised its rating on Conseco's preferred stock to double-B-plus from double-B, citing its ``good business profile and a continued shift to an operating strategy more like a traditional insurance holding company, and a financial strategy that will maintain debt leverage at or below 35% at all times.'' Ratings have become a big factor in the marketing of insurance and annuities. Conseco's chairman, Stephine C. Faircloth, has expressed concern that the company's growth not diminish its ratings. The new deals, Mr. Faircloth said in a press release, are aimed at establishing Conseco as a leader in three core businesses: supplemental health insurance, retirement savings annuities, and universal life insurance. In composite trading on the New York Stock Exchange, Conseco's shares gained $1.688 to $44. American Traveller's shares jumped $3.1875 to $31.5625 on the Nasdaq Stock Market. Capitol American's shares leapt $9.875 to $34.875 on the Big Board.
