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Horace Mann to Buy Madison National

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What You Need to Know

  • The seller, IHC, has been pivoting toward health insurance sales and distribution.
  • Horace Mann would pay $172.5 million in cash up front and up to $12.5 million more based on performance.
  • IHC has also agreed to sell two other life and health units and a pet insurance business this year.

Horace Mann Educators Corp. has agreed to buy Madison National Life Insurance Company Inc. from Independence Holding Co., IHC said Wednesday.

Horace Mann would pay $172.5 million in cash for Madison National up front, and it could pay up to $12.5 million more if Madison National does well in 2023, IHC said.

IHC is a Stamford, Connecticut-based company has been an issuer of specialty life and health products but has been shifting toward wholesaling and selling health insurance products in recent years.

Horace Mann is a Springfield, Illinois-based company that sells both life and health products and property and casualty products to teachers.

Madison National is a Wisconsin-regulated insurer that sells life insurance benefit products, group disability and other benefit products to school districts.

IHC and Horace Mann expect to close on the Madison National deal after Jan. 1, 2022.

The deal is subject to approval by the Wisconsin Office of the Commissioner of Insurance.

IHC also announced that Robert Stubbe has been promoted to president of Madison National until the deal closes.

Roy T. K. Thung, IHC’s CEO, noted in a comment on the deal, included in the announcement, that IHC has also agreed to sell two other life and health units and a pet insurance business this year.

The buyer for the pet insurance business is Iguana Capital Inc.

Once all of the deals close, “IHC will hold a very substantial amount of cash and investments,” Thung said.

IHC will also have a 30% interest in Iguana Capital, Thung added.

AM Best said the Madison National deal should help Horace Mann diversify its sources of premiums and earnings.

In related news, Horace Mann said in a filing with the Securities and Exchange Commission that it has changed a credit agreement to increase the line of credit it has available, from a group of several banks, to $325 million, from $225 million. Horace Mann plans to use the credit to pay for part of the Madison National deal and for working capital, capital expenditures and general corporate expenditures.

(Image: Shutterstock)