Conseco Announces Four Strategic Acquisitions, Raises Operating EPS Expectations for 1997.CARMEL Car·mel also Car·mel-by-the-Sea A city of western California on Carmel Bay at the southern end of the Monterey Peninsula. It is an artists' and writers' colony and a popular tourist spot. Population: 4,130. , Ind IND Investigational new drug Therapeutics A status assigned by the FDA to a drug before allowing its use in humans, exempting it from premarketing approval requirements so that experimental clinical trials may be conducted. See Phase 1.2, 3 studies, Sponsorship. .--(BUSINESS WIRE)--Aug. 26, 1996--Conseco, Inc. (NYSE NYSE See: New York Stock Exchange :CNC (Computerized Numerical Control) See numerical control. CNC - Collaborative Networked Communication ) today announced four separate transactions which will solidify so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. the company's leadership in its key markets: -- Conseco Conseco (NYSE: CNO), originally Security Life of Indiana, is a financial services organization based in Carmel, Indiana. Conseco's insurance subsidiaries provide life insurance, annuity and supplemental health insurance products to more than 4 million customers in the has agreed to acquire American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Travellers Corp. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ATVC ATVC Ascent Thrust Vector Control ATVC Automatic Thrust Vector Control ATVC Automatic Throttle Valve Control ), a leading provider of long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. insurance, for approximately $793 million in Conseco common stock. -- Conseco has agreed to acquire Capitol Capitol, seat of the U.S. Congress Capitol, seat of the U.S. government at Washington, D.C. It is the city's dominating monument, built on an elevated site that was chosen by George Washington in consultation with Major Pierre L'Enfant. American Financial Corp. (NYSE:CAF CAF - constant applicative form ), a leading provider of cancer insurance and other supplemental health insurance products, for approximately $650 million in cash and Conseco common stock. -- Conseco is distributing the stock of American Life Holdings, Inc., a leading provider of retirement savings annuities, previously held by Conseco Capital Partners II, L.P. to all partners. Conseco then intends to acquire the stock of American Life Holdings not already owned by Conseco for approximately $165 million in cash. -- Conseco intends to merge with Bankers Life Holding Corp. (NYSE:BLH BLH Baldwin-Lima-Hamilton (locomotive manufacturer) BLH Bellingham, Washington (border patrol station) BLH Bidirectional Long Haul ), a leader in supplemental health insurance products for America's seniors, in a transaction under which Conseco will acquire the outstanding shares of BLH that Conseco does not already own for approximately $117 million in Conseco common stock. Conseco Chairman Stephen Stephen, 1097?–1154, king of England (1135–54). The son of Stephen, count of Blois and Chartres, and Adela, daughter of William I of England, he was brought up by his uncle, Henry I of England, who presented him with estates in England and France and C. Hilbert Noun 1. Hilbert - German mathematician (1862-1943) David Hilbert said, "The life insurance industry is undergoing rapid consolidation. Conseco is positioned as a proven consolidator. As we've we've Contraction of we have. we've have stated, we're we're Contraction of we are. we're we are focusing exclusively on those acquisitions which: (1) complement our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. business strategy; (2) maintain our earnings momentum; and (3) maintain our conservative capital structure. The acquisition of Life Partners Group (completed August 2) fits those requirements perfectly, as do the four transactions announced today. Our strategic objective is to be a leader in each of our major product lines: (1) senior products, principally supplemental health insurance; (2) retirement savings annuities; and (3) universal life insurance. These transactions firmly establish Conseco's leadership in all three markets while generating significant new growth opportunities with one of the industry's finest distribution systems encompassing some 90,000 independent and career agents. Following completion of the transactions, Conseco will be the leader or among the leaders in long-term care insurance, agent-produced Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. supplement insurance, new universal life production, and annuities. "Assuming completion of these transactions before the end of 1996, as expected," Hilbert said, "we believe Conseco's operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before will be able to reach our previously announced goal of $5.00 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share in 1997, compared to current analyst expectations of $4.25 to $4.65. Our yearend book value per share of common stock would be approximately $31.00 after completion of these transactions and assuming conversion of all convertible instruments. The transactions will further broaden and balance Conseco's product offerings, making our earnings more stable and predictable even when economic conditions or interest rates change." "Upon completion of these transactions," Hilbert said, "Conseco will have $30 billion of assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. , $26 billion of assets on its own balance sheet, $6.8 billion of annual premiums and revenues, $4.2 billion of equity market capitalization Equity Market Capitalization A measure of the total market value of an equity market. The measure is calculated by taking the market capitalization of all companies in the equity market and adding them together to arrive at the capitalization for the market as a whole. , and more than $650 million of projected annual EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). (earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income ) cash flow." "These transactions have been structured to maintain Conseco's debt-to-capital ratio in our targeted 30 percent-35 percent range," Hilbert said. "After the transactions, Conseco expects to have $5.4 billion of total capital, comprised of $3.5 billion of equity, including the planned issuance of about $300 million of a new tax-deductible Tax-deductible The effect of creating a tax deduction, such as charitable contributions and mortgage interest. preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and assuming the conversion of all convertible instruments, and $1.9 billion of debt." American Travellers. Under the definitive agreement between Conseco and American Travellers, each of the 18.0 million issued and outstanding shares of ATVC common stock would be converted into the right to receive a fraction of a share of Conseco common stock having a value between $32.00 and $35.03, depending on the average closing price of Conseco shares in the 10 trading days In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. immediately preceding the second trading day prior to closing. Each $1,000 principal amount of ATVC's 6-1/2 Percent Convertible Subordinated Debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before would become convertible into shares of Conseco common stock having a value between $2,110 and $2,310, depending on the same average price. The total value of Conseco common stock to be issued in this transaction includes $575 million to acquire ATVC's outstanding common shares and $218 million when the ATVC debentures are converted. Under the agreement, American Travellers would be merged into Conseco. Consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the ATVC transaction, which is subject to customary terms and conditions, including approval by the stockholders of both ATVC and Conseco and regulatory approvals, is expected by the end of the fourth quarter of 1996. John A. Powell, chairman, president and chief executive officer of American Travellers, said, "We are excited to be joining forces with Conseco. The combined organization will have stronger profitability, more diversified diversified (di·verˑ·s operations and greater financial flexibility than American Travellers currently enjoys. These benefits will translate, we believe, into a more positive view by the rating agencies. I am also pleased to be continuing as president of American Travellers Life, with the opportunity to build on the company's outstanding growth in long-term care business." Capitol American. Under the definitive agreement between Conseco and Capitol American, each of the 17.8 million issued and outstanding shares of CAF common stock would be converted into the right to receive $30.00 in cash and $6.50 of Conseco common stock. The $680 million total value of the transaction includes $534 million in cash, $116 million in Conseco stock and $30 million of CAF debt being assumed by Conseco. Under the agreement, Capitol American would be merged into Conseco. Consummation of the transaction, which is subject to customary terms and conditions, including approval by the stockholders of CAF and regulatory approvals, is expected by the end of the fourth quarter of 1996. David H. Gunning, chairman, Capitol American's chairman, president and chief executive officer, said, "Capitol American's net income has increased every year since the company was founded in 1970. Now, however, we have reached a level where the next logical growth step is to become part of a significantly larger insurance organization so we can continue to provide value to our shareholders as well as outstanding products and service to our agents and policyholders." American Life Holdings. Under Conseco's offer, each of the 7.2 million outstanding shares of American Life Holdings not already owned by Conseco would be converted into the right to receive $23.00 in cash. American Life Holdings would become a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Conseco. Completion of the transaction, which is subject to approval by the shareholders of American Life Holdings, is expected by the fourth quarter of 1996. Bankers Life Holding Corp. In the intended merger, each of the 4.7 million outstanding shares of BLH common stock not already owned by Conseco would be converted into the right to receive $25.00 in Conseco common stock. BLH would be merged into Conseco. Completion of the transaction, which is subject to review by the Securities and Exchange Commission of the information to be submitted to shareholders of BLH describing the terms of the merger and their appraisal rights Appraisal rights A right of shareholders in a merger to demand the payment of a fair price for their shares, as determined independently. , is expected to occur in the fourth quarter of 1996. Conseco, a financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. organization headquartered in Carmel, Ind., owns and operates life insurance companies and provides investment management, administrative and other fee-based services. Conseco, Inc. Life insurance operations Senior market operations include the activities of Bankers Life Holding Corp. (NYSE:BLH), in which Conseco currently holds a 90.5 percent equity interest (and will hold a 100 percent equity position after completion of the BLH portion of this announcement). BLH's principal operating company operating company A business that engages in transactions with outsiders. , Bankers Life and Casualty Bankers Life and Casualty is primarily a health insurance company in the United States. It was founded in 1879 and was previously known as White Cross. It was formerly owned by millionaire investor John D. , provides Medicare supplement, long-term care, life insurance, annuities and other health products to America's seniors. Bankers distributes its products through approximately 200 branch offices and 3,200 career agents. Annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. operations include the activities of Great American Reserve Insurance and Beneficial Standard Life. These companies market their products through two distribution channels: (1) approximately 3,000 educator market specialists, who sell tax-qualified annuities and certain employee benefit-related insurance products primarily to school teachers and administrators; and (2) approximately 9,000 professional independent producers, who sell various annuity and life insurance products aimed principally at the retirement market. Upon completion of the transactions announced today, this segment will also include the operations of American Life Holdings, which sells annuities through approximately 25,000 professional independent producers. Life insurance operations include the activities of Philadelphia Life, Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. General Life, Lamar Life and Wabash Life, beginning
with their acquisition in 3Q96. These companies distribute universal
life insurance products using two primary marketing systems -- the
client company system and the regional director system -- comprising a
total of approximately 25,000 professional independent producers.
Segment activities also include Conseco's other wholly owned life
insurance subsidiaries -- Bankers National Life, National Fidelity Life
and Lincoln Lincoln, city and district, EnglandLincoln, city (1991 pop. 79,980) and district, Lincolnshire, E England, in the Parts of Kesteven, on the Witham River. American Life -- which have profitable in-force blocks of annuity and life products, but do not currently market their products to new customers. Conseco Private Capital Group makes direct strategic investments in growing companies, providing these firms with the capital or financing they need to continue their growth, make acquisitions or realize the potential of their businesses. Fee-based operations Conseco's subsidiaries provide various services to affiliated and unaffiliated clients. Conseco Capital Management manages $28 billion of invested assets. Bankmark provides marketing services to financial institutions related to the distribution of insurance and investment products. Conseco Risk Management distributes property/casualty insurance products as an independent agency. Conseco Mortgage Capital originates and services mortgages. -0-
American Travellers Corp. (NASDAQ:ATVC)
Headquarters: Bensalem, Pennsylvania
Chief executive: John A. Powell (Chairman, President and Chief
Executive Officer)
Principal subsidiaries: American Travellers Life, United General
Life Insurance Co., American Travellers
Insurance Services Co.
Assets: $0.9 billion (6/96)
Statutory capital and
surplus: $83.6 million (6/96)
Total premiums: $274 million (full-year 1995), $187 million
(six months 1996)
Policies in force: 434,000 (12/95)
Target market: Consumers in 65+ age group (33 million
people today, expected to grow to 40 million
people by 2010, 65 million by 2030 and 95
million by 2050)
Principal product: Long-term care insurance (90% of in-force
premiums). No. 2 share of long-term
care insurance market currently (No. 1 is
Amex Life, a subsidiary of GE Capital). After
today's transactions are completed, Conseco
will have the No. 1 market share.
Other products: Medicare supplement (6% of in-force premiums),
life insurance (2%), other (2%)
Products distributed
by: 22,000 independent agents in 46 states, District
of Columbia, and U.S. and British Virgin Islands.
52-week stock trading
range: $29-3/8 - $11-5/64
Capitol American Financial Corp. (NYSE:CAF)
Headquarters: Cleveland, Ohio
Chief executive: David H. Gunning (Chairman, President and
Chief Executive Officer)
Principal subsidiaries: Capitol American Life Insurance Co., Frontier
National Life Insurance, Capitol National
Life Insurance Co.
Assets: $1.0 billion (6/96)
Statutory capital and
surplus: $98.4 million (6/96)
Total premiums: $282 million (full-year 1995), $147 million
(six months 1996)
Policies in force: 739,000 (6/96)
Principal product: Cancer insurance (66% of 1995 premiums).
No. 2 share of cancer insurance market
currently (No. 1 is AFLAC).
Other products: Accident insurance (15% of 1995 premiums,
No.5 market share), intensive care insurance
(11%, No. 2 market share behind AFLAC), heart
care insurance (6%, No. 2 market share behind
Transport Life), other (2%).
Products distributed
by: 3,700 independent agents in 47 states,
District of Columbia, Puerto Rico and U.S.
Virgin Islands organized in two divisions
-- Consumer Marketing (soliciting individuals
door-to-door) and Business Marketing
(soliciting individuals at the workplace).
52-week stock trading
range: $26-3/4 - $19-1/2
American Life Holdings, Inc.
History: Acquired September 1994, by Conseco Capital
Partners II, L.P., a limited partnership formed in
1994 for the purpose of acquiring life insurance
companies. Investors in the partnership include
Conseco, Inc. and approximately 35 other
institutions and individuals. Conseco currently
has a 38 percent stake in American Life Holdings.
Conseco announced its decision to terminate the
partnership on March 12, 1996, and on Aug. 26,
1996, announced its intention to acquire the
remainder of the ownership of American Life
Holdings.
Headquarters: Des Moines, Iowa (to be moved to Conseco's
headquarters in Carmel, Indiana, by Nov. 8, 1996)
Chief executive: Stephen C. Hilbert (Chairman)
Principal
subsidiaries: American Life and Casualty Insurance Co., Vulcan
Life Insurance Co.
Assets: $6.0 billion (6/96)
Total premiums: $826 million (full-year 1995), $359 million
(six months 1996)
Policies in force: 318,000 individual policies and 132,000 group
certificates (12/95)
Target market: "Retirement savers"
Principal
products: Deferred annuities (91% of 1995 premiums), life
insurance (6%), immediate annuities (3%)
Products
distributed by: 25,000 independent agents in 48 states
Bankers Life Holding Corp. (NYSE:BLH)
History: In November 1992, Conseco Capital Partners, L.P.
(Partnership I) acquired Bankers Life and Casualty
Co. and its affiliates through BLH. In March
1993 BLH completed an initial public offering of
a 36 percent interest in BLH's common stock
outstanding. Conseco received 31 percent of BLH's
common stock upon the IPO and the dissolution
of Partnership I. Conseco later purchased more
BLH shares and BLH instituted a program
to repurchase its own stock. As a result, Conseco
currently owns 90.5% of shares outstanding.
Headquarters: Chicago, Ill.
Chief executive: Fred E. Crosley (President and Chief Executive
Officer)
Principal
subsidiaries: Bankers Life and Casualty Co., Certified Life
Insurance Co.
Assets: $4.9 billion (6/96)
Total premiums: $1.5 billion (full-year 1995), $758 million
(six months 1996)
Policies in force: 1,412,000 individual policies and 1,349,000 group
certificates (12/95)
Target market: America's seniors -- 65+ age group (33 million
people today, expected to grow to 40 million
people by 2010, 65 million by 2030 and 95 million
by 2050)
Principal products: Medicare supplement insurance (39% of 1995 premiums),
group health insurance (20%), annuities (17%),
long-term care insurance (11%), individual life
insurance (6%), other (7%)
Products distributed
by: 3,200 career agents and 200 branch offices in 49
states (plus District of Columbia and Canada).
Also by a small number of independent brokers and
financial institutions under programs established
in 1996.
52-week stock
trading range: $23-1/4 - $17-3/4
CONTACT: Conseco, Inc. Jim Rosensteele, 317/817-2893 E-mail: ir@conseco.com |
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