In an effort to build capital, Carmel, Ind.-based Conseco has announced that it plans to merge Conseco Insurance Company and Conseco Health Insurance Company into Washington National Insurance Company (WNIC), according to a press release. All three companies involved in the deal, which is subject to regulatory approval, are Conseco subsidiaries.
Conseco expects to complete the merger in the fourth quarter of 2009. Upon closing, Conseco says that WNIC would have approximately $5.3 billion of statutory assets, 925,000 policies in force, $625 million of annual premiums, and $4.3 billion of statutory policy reserves.
The carrier says that the consolidation will help it build capital and simplify the structure of its Conseco Insurance Group segment by putting nearly half of its in-force business and all of its new sales activity into a single company. "We expect this merger to provide many benefits, chief among which will be to increase Conseco's total adjusted statutory capital and our consolidated risk-based capital ratio," Conseco CEO Jim Prieur said in the release.
In addition, Conseco estimates that it will save $2.5 million annually as a result of the merger by eliminating costs associated with financial reporting and related audits and by reducing overall premium tax payments. Those savings, however, would be offset in part by approximately $8 million in one-time expenses, including costs to update and restock forms, update IT systems, modify agent appointments, and complete other changes arising from the merger.