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Independence Holding May Go Private

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What You Need to Know

  • Geneve Holdings, owned by the Netter family, has controlled IHC for decades and wants to take it private.
  • The Geneve offer implies that IHC has a market cap of about $730 million.
  • Analysts state low interest rates and new accounting rules are reasons for the trend to take companies private.

Geneve Holdings — the family-owned company that controls 62.5% of the common stock of Independence Holding Company — wants to take IHC private.

Geneve has made IHC a non-binding offer to acquire all other investors’ IHC shares for $50 each. IHC share prices have been between $38 to $45 for most of the year.

A $50 stock sale price would give the company a market capitalization level, or total stock value, of about $730 million, according to Nasdaq.

IHC is a Stamford, Connecticut-based company that has controlled insurance companies that wrote pet insurance, medical stop-loss insurance and supplemental health insurance products.

In recent years, IHC has shifted to a focus on selling Medicare plans and individual major medical insurance policies written by other companies, rather than on writing and selling its own insurance products.

Deal Details

The IHC board has formed a special committee of independent directors to consider the proposal from Geneve Holdings and to seek and evaluate proposals for alternative transactions, IHC said Monday.

IHC and Geneve Holdings did not give a deal completion date estimate. They noted that the deal is subject to approval by the special committee and by IHC shareholders other than Geneve Holdings.

The IHC-Geneve Holdings deal also depends on the completion of the pending sale of two IHC insurance company subsidiaries, Independence American Holdings Corp. and Standard Security Life Insurance Company of New York.

Geneve Holdings said it intends to keep IHC, not sell IHC to another entity.

IHC and the Netter Family

IHC was started in 1980. Edward Netter, an investment banker with a firm that eventually became part of Lehman Brothers, founded Geneve Holdings in 1987.

He and his family used Geneve Holdings as a vehicle for acquiring IHC and other companies, and IHC itself became a vehicle for acquiring insurance companies. Some of the current and former insurance company subsidiaries were organized before 1900.

Netter died in 2011.

In a 2019 examination report for Southern Life and Health Insurance Company, an IHC sister company that was also owned by Geneve Holdings and was acquired by Universal Fidelity Life Insurance Company, Wisconsin insurance regulators said that Barbara Netter, Edward Netter’s widow, owned 50.04% of Geneve Holdings’ common shares, as of the end of 2017, and that other Netter family members owned or controlled all other Geneve Holdings common shares.

Edward and Barbara Netter financed the start of the Barbara and Edward Netter Center for Community Partnerships at the University of Pennsylvania.

They also financed the start of the Alliance for Cancer Gene Therapy, a public charity that supports cell and gene therapy research.

The Implications

A publicly traded company has stock held by many outside investors.

IHC is one of several publicly traded life and health insurers that have been involved recently in proposed or completed transactions that have resulted, or could result, in those companies giving up their status as public companies.

In May, for example, the Iowa Farm Bureau Federation and its Farm Bureau Property & Casualty Insurance Company subsidiary took FBL Financial Group — a life insurance and annuity issuer owned partly by the federation, partly by the P&C insurer and partly by outside investors — private.

Analysts say some life and annuity insurers are going private because of the effects of low interest rates on company performance and partly because of the effects of new accounting rules that tend to make the earnings of annuity issuers look more volatile.

Some health insurers and other companies appear to be going private because they feel that meeting the SEC requirements and other requirements imposed on public companies is more trouble than it’s worth.

(Photo: Michael Nagle/Bloomberg)