Eastern Insurance Holdings has entered into a definitive agreement to sell its wholly-owned group benefits insurance subsidiary, Eastern Life and Health Insurance (ELH), to Security Life Insurance Company of America (Security).

The agreement effects a statutory merger of ELH into Security, with Security continuing as the surviving corporation. Total transaction consideration to EIHI will be equal to ELH’s shareholders’ equity, plus $250,000.

The merger agreement contains customary representations, covenants and conditions to closing.  The transaction requires the approval of the Insurance departments of Pennsylvania and Minnesota, the domiciles of ELH and Security, respectively. Subject to the receipt of those approvals, the transaction is expected to close by mid-summer. Closing of the transaction is not conditioned on the receipt of any external financing or any rating agency action.

Bruce Eckert, CEO of EIHI, said: The sale of our life and health subsidiary provides additional liquidity to our balance sheet and allows us to focus more intensely on the growth prospects of our highest margin business segment workers’ compensation insurance.

Gil Rohde, president and CEO at Security, said: The acquisition of ELH will improve and expand security’s geographic footprint and distribution network, enhance efficiencies and add group product line diversity, as well as offer cross-selling opportunities for the combined company.