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HC2 Moves Closer to Selling Long-Term Care Insurance Unit

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What You Need to Know

  • Gorzynski has been the LTCI unit’s chairman.
  • He has experience with investment banking deals that involve troubled companies.
  • Continental acquired Kanawha, an LTCI issuer, from Humana in 2018.

HC2 Holdings Inc. is getting closer to selling Continental Insurance Group Ltd. — a company that’s managing coverage for 125,000 life, health, annuity and long-term care insurance (LTCI customers — to Michael Gorzynski, an investment banker who has been serving as the chairman and president of Continental since October.

HC2 gave investors a Continental deal update last week, when it announced its earnings for the first quarter. The publicly traded, New York-based holding company buys, manages and sells many different types of companies

Continental is the Austin, Texas-based parent of Continental LTC Inc. and Continental General Insurance Company. It ended 2020 with about $4.9 billion in cash and invested assets. It may be best known for a move to acquire Kanawha Insurance Company, an LTCI issuer, from Humana Inc. in 2018.

HC2 announced in December that Gorzynski was trying to buy the insurance business through a transaction with a total value of about $90 million.

The companies started out using a non-binding indication of interest to explore the possibility of making a deal, then shifted to using a definitive deal agreement in March. HC2 said it hoped to get an approval from the Texas Department of Insurance and close on the deal by Sept. 30.

Wayne Barr, HC2’s CEO, talked about Gorzynski’s offer during a securities analyst conference call last week.

“As we previously announced, Mike presented us with a non-binding indication of interest in December 2020,” Barr said. “Subsequent to our announcement, we received and the disinterested members of our board evaluated additional proposals with the assistance and advice of outside counsel and an independent financial advisor.”

Board members not involved with the acquisition effort ended up supporting the offer from Gorzynski’s company, Continental General Holdings LLC.

“We now await regulatory approval,” Barr said.

He declined to make a new prediction about when the Continental deal will close. “We just had not felt comfortable making any kind of concrete closing date for that, given the fact that the regulator has to go through its process,” Barr said.

 (Photo: Shutterstock)