Continuing its rush to rebuild capital, US insurer Conseco is to
merge two of its insurance subsidiaries, Conseco Insurance Company
and Conseco Health Insurance, into a third subsidiary Washington
National Insurance Company (WNIC).
“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,” commented Conseco’s CEO
Jim Prieur.
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Upon completion of the merger, WNIC will have about $5.3 billion of
statutory assets, 925,000 policies in force, $625 million of annual
premiums, and $4.3 billion of statutory policy reserves, comprised
of specified disease and other supplemental health policies (58
percent), annuities and other deposits (33 percent) and life
insurance policies (9 percent).
In addition to capital enhancement, merger of the insurance units
is anticipated to yield annual cost savings of $2.5 million.
The proposed merger follows a number of capital raising moves, the
most recent of which involved US reinsurer Wilton Reassurance
Company (Wilton Re) assuming 100 percent coinsurance of 104,000
life insurance policies. Conseco, which received a $57.5 million
ceding commission from Wilton Re, transferred $409 million in cash
and policy loans and $466 million of statutory policy and other
reserves to Wilton Re.
Prieur noted that on a pro-forma basis had the Wilton Re deal and
the merger of the three insurance units been completed as of 30
June 2009, Conseco’s consolidated risk-based capital ratio would
have been 265 percent, an increase of 18 percentage points.
