Texas-based insurance firm Continental General Insurance (CGIC) has completed its previously announced acquisition of Humana’s long-term care (LTC) insurance business KMG America.
Image: CGIC completes acquisition of KMG America from Humana. Photo: courtesy of rawpixel/Unsplash.com.
CGIC, which is the insurance subsidiary of HC2, is expected to expand its insurance investment portfolio to nearly $3.8bn of cash and invested assets, through the acquisition of KMG.
Kanawha Insurance (KIC), the subsidiary of KMG, includes the closed block of Humana’s non-strategic commercial long-term care insurance policies that caters to around 29,300 policyholders.
As of 31 March, 2018, Kanawha had about $150m in statutory surplus and around $160m of statutory total adjusted capital with almost $2.4bn of cash and invested assets.
As per the terms of the stock exchange deal made in November 2017, Humana made nearly $195m cash capital contribution to Kanawha prior to the closing of the deal.
Following the deal completion, CGIC will have cash and invested assets of around $3.8bn, compared to $1.5bn it had before the transaction.
HC2 said that the pro-forma statutory surplus for the combined entities is estimated to be $155-175m while total adjusted capital is estimated at $185-205m, subject to closing adjustments.
HC2 chairman, president and CEO Philip Falcone said: “Completing the acquisition of Humana’s long-term care insurance business marks another significant milestone in the growth of our insurance subsidiary and significantly increases the size of our insurance investment portfolio and more than doubles our total adjusted insurance capital base from approximately $85 million to the estimated $185 million to $205 million, providing incremental value to our shareholder base.”
“We believe this transaction validates our platform and positions us as the counterparty of choice for future LTC transactions.”
For Humana, the completion of the sale represents its exit from the commercial long-term care insurance business.
At the time of entering into the deal, Humana said that the acquisition of KMG by CGIC will benefit policyholders owing to the Texan insurance firm’s significant experience with and concentrated focus on the commercial long-term care insurance market.
CGIC offers long-term care, life and annuity coverage to more than 90,000 members.