Symetra Life Insurance Company has agreed to acquire the renewal rights for medical stop-loss insurance policies issued by American United Life Insurance Company (AUL) through its R.E. Moulton, Inc. underwriting affiliate.
Symetra Life, Bellevue, Wash., says the $26 million cash deal is expected to close on July 1, 2011. The transaction will be accretive to 2011 adjusted operating income by approximately $0.01 per share.
The agreement centers on renewal rights for AUL stop-loss policies representing approximately $120 million in premium. Symetra’s medical stop-loss premiums for the 12 months ended March 31, 2011 totaled $386 million, the company says.
“This acquisition supports our capital deployment strategy and demonstrates Symetra’s commitment to invest in smart growth opportunities,” says Symetra President and Chief Executive Officer Tom Marra. “It is a straightforward transaction that will strengthen a core business line by increasing our stop-loss premiums and expanding our customer base.
Over time, we expect to achieve greater economies of scale and operating efficiencies in our stop-loss business,” he adds.
To minimize customer disruption, employees at REM will continue to run current stop-loss operations through Jan. 31, 2012 at Symetra’s direction under a transition services arrangement. Symetra expects to extend employment offers to select REM employees during this period.
On Feb. 1, 2012, Symetra employees will assume responsibility for administering AUL stop-loss policies that have not yet reached their renewal date.
Medical stop-loss insurance protects employers that self-fund their group health insurance plans against large or potentially catastrophic claims, thereby reducing their overall risk exposure.
–Warren S. Hersch