Coveting new markets and distribution channels, mergers among life insurers are continuing apace.

The latest manifestation of the deal-making is an agreement, announced on October 10, by The Penn Mutual Life Insurance Co. to acquire Vantis Life Insurance Co. Once finalized, Vantis Life will become a wholly-owned affiliate of Penn Mutual, a Horsham, Pa.-based mutual life insurer since 1847.

Related: MassMutual to acquire MetLife advisor network for $300 million

Awaiting regulatory approval, the merger will expand Penn Mutual’s footprint by adding to its 6,000-strong advisor network Vantis Life’s direct-to-consumer and bank channels. Vantis Life distributes life insurance and annuities through more than 150 banks and credit unions, including large super-regional and regional banks. The carrier markets its products in 45 states with more than 10,000 branch locations.

While Vantis Life will become a wholly owned affiliate of Penn Mutual, both companies will continue to operate under their current brands and maintain their respective management teams and workforces. Financial terms of the merger were not disclosed.

According to a Penn Mutual spokesperson, Penn Mutual and Vantis Life had as of June 30 surpluses of about $1.9 billion and $82.3 million, respectively. Penn Mutual has $1 billion of life insurance in force.

“The merger will enable Penn Mutual to leverage Vantis Life’s highly skilled team and great track record serving the middle market,” says Penn Mutual Chairman and Chief Executive Officer Eileen McDonnell. “This represents an opportunity to expand our market reach and insure more American families and households.”

The transaction is an outgrowth of a strategy launched by Penn Mutual in 2010, dubbed “Decade of Opportunity,” to boost product sales through both acquisitions and organic growth. In respect to the former, Penn Mutual acquired last year Texas-based annuity provider Longevity Insurance Co, which operates in 45 states.

Since 1982, Penn Mutual has also owned Janney Montgomery Scott, a brokerage firm. Pointing to Janney’s success — the brokerage firm has operated profitably and independently since its acquisition — McDonnell says Vantis Life will enjoy an equal measure of independence, as the wide latitude afforded subsidiaries has served Penn Mutual well.

McDonnell added that Penn Mutual will continue to grow and invest in its advisor network, a field force comprising more than 1,000 career agents and 5,000 independent advisors, many of whom cater to the high net worth market. Among them: insurance and financial service professionals affiliated with the producer groups NFP and Lion Street.

She says Penn Mutual is counting on these initiatives to help propel the Pennsylvania-based carrier to the top tier among mutual insurers.

Related: Genworth prepared for asset sales as market shuns borrowers

Penn Mutual’s purchase of Vantis Life will, says CEO Eileen McDonnell, enable the mutual insurer to achieve economies of scale in a consolidating marketplace. (Photo: Thinkstock)

“Pre-crisis, Penn Mutual ranked 38 in new life insurance sales,” says McDonnell. “Today, we occupy the 17th spot. “We believe that over the next 8 years, we should be able to break through the top 10 mutual insurers and mutual holding companies.

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“Since the financial crisis of 2007-2009, we’ve increased life insurance sales at a CAGR [compounded annual growth rate] of 7 percent,” she adds. “That compares with an industry-wide growth rate that, according to LIMRA, hovers at just 2 percent.”

She notes also that the merger will enable Vantis Life to grow its sales through financial institutions as result of Penn Mutual’s sterling credit ratings: The carrier is currently rated A+ (Superior) by A.M. Best; Vantis Life has an A.M. Best rating of A-.

Riding an M&A wave

The Penn-Mutual-Vantis Life deal comes on the heels of Nationwide’s blockbuster acquisition of Jefferson National. Announced on September 28, that acquisition will avail Nationwide of Jefferson National’s registered investment advisors (RIAs) and fee-based advisors, a distribution network of 4,000-plus financial professionals who sell investment products and services. Chief among them: Monument Advisor, a flat-fee variable annuity platform that offers consumers access to 380-plus tax-advantaged investment options from over 30 mutual fund families.

Related: Phoenix finalizes merger with private equity-backed reinsurer

The Penn-Mutual-Vantis Life deal comes on the heels of Nationwide’s blockbuster acquisition of Jefferson National, announced on September 28. (Photo: Thinkstock)

In February of 2016, Massachusetts Mutual Life Insurance Co. nabbed the retail distribution network of MetLife Inc., boosting its agency field force by 5,600 insurance and financial service professionals. And last January, American International Group sold its broker-dealer unit, AIG Advisor Group, to investment funds affiliated with Donald Marron’s Lightyear Capital LLC and PSP Investments, a Canadian pension investment manager.

Related: Shifting into high gear: M&A deal-making among brokerages

On the horizon

As with Nationwide’s buyout of Jefferson National, Penn Mutual’s purchase of Vantis Life will, says McDonnell, enable the mutual insurer to achieve economies of scale in a consolidating insurance and annuities marketplace. She cites other benefits expected from Penn Mutual’s growth strategy, including:

    • An enhanced ability to cost-effectively comply with growing regulatory requirements (including the new Department of Labor fiduciary rule);

    • implement new technologies to better serve advisors and customers;

    • manage volatile markets and sustained low interest rates; and

    • speed development and market launch of new products.

“In the coming years, Penn Mutual customers can look forward to a new product lineup through our Longevity Insurance unit,” says McDonnell. “We’ll be fortifying our already growing leadership presence in the domestic life insurance space by filling gaps in life insurance products and distribution channels that don’t exist today in the Penn Mutual product family.”

 

Related:

M&A among insurers pegged at $200 billion-plus thru 3Q 2015 

Heading off a creeping crisis: exit planning for independent agents & advisors 

Prime time for private equity-backed insurance brokers

Lion Street: Aiming to become king of the producer group jungle?

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