Conseco Inc. announced a plan to consolidate 3 insurance companies within its Conseco Insurance Group segment.

Under the plan, the company would merge Conseco Insurance Company and Conseco Health Insurance Company into a third subsidiary, Washington National Insurance Company. Subject to the approval of insurance regulators in Arizona, California and Illinois, Conseco, Carmel, Ind. expects to complete the merger in the fourth quarter.

“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,” said Conseco CEO Jim Prieur.

In addition, Prieur said, the merger would provide an estimated $2.5 million of annual savings by eliminating the costs to administer and file financial reports and related audits and examinations on 3 statutory companies and by reducing overall premium tax payments.

Offsetting these savings would be about $8 million of one-time expenses over the next 12 months, including costs to update and restock forms, update IT systems, modify agent appointments, and complete other changes arising from the merger, Conseco says.

Upon completion of the merger, WNIC would 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%), annuities and other deposits (33%) and life insurance policies (9%), Conseco says.