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Independence Holding Company Announces Acquisition of $65 Million Life Block and Sale of Credit Segment by Madison National Life Insurance Company, Inc.
STAMFORD, Conn.--(BUSINESS WIRE)--March 6, 2008--Independence Holding Company (NYSE: IHC) today announced that Madison National Life Insurance Company, Inc., IHC's wholly owned subsidiary, has entered into an agreement to acquire a block of life insurance policies with approximately $65 million of life and annuity reserves. The acquisition is scheduled to close and be effective on April 1, 2008. Under the terms of the acquisition, Madison National Life will assume administration of the policies in the block beginning October 1, 2008. The block consists of approximately $34,000,000 of older, traditional life reserves and $31,000,000 of annuity reserves.
IHC also announced that Madison National Life has closed on the sale of its credit segment. Under statutory accounting principles, such sale will have the effect of increasing Madison National Life's surplus. Under GAAP, the sale will result in a loss for the quarter from discontinued operations, primarily due to the write-off of deferred acquisition costs related to the credit segment.
Roy T.K. Thung, IHC's Chief Executive Officer, commented, "The sale of the credit segment is a very positive development for Madison National Life in that it allows us to: dispose of a business line that had been losing money for the last several years, reduce overhead, focus attention and assets elsewhere and increase our statutory capital. Gross premiums from the credit segment totaled approximately $23 million, or less than 4%, of our total gross premiums. The disposition of the credit segment will be reported as discontinued operations in IHC's 2007 annual financial report. We are very pleased that Madison National Life has begun 2008 by shedding an unprofitable segment, redeploying capital to its (consistently profitable) acquisition group and signing an agreement to acquire a block of policies in a transaction that we expect will be accretive to earnings."
IHC is a holding company principally engaged in the life and health insurance business and the acquisition of blocks of policies through its insurance company subsidiaries (Standard Security Life Insurance Company of New York and Madison National Life Insurance Company, Inc.), its affiliate (American Independence Corp. (NASDAQ: AMIC)), and its managing general underwriters, third-party administrators, and marketing affiliates. Standard Security Life markets medical stop-loss, small group major medical, short-term medical, major medical for individuals and families, limited medical, group long and short-term disability and life, dental, vision and managed health care products. Madison Life sells group life and disability, employer medical stop-loss, small group major medical, major medical for individuals and families, short-term medical, dental, vision, and individual life insurance. AMIC is a holding company principally engaged in the health insurance and reinsurance business through Independence American Insurance Company and its managing general underwriter division.