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Aug. 1, 2012 /PRNewswire/ -- Torchmark Corporation (NYSE: TMK) announced today that it has signed a definitive agreement to acquire Family Heritage Life Insurance Company of America ("Family Heritage"), a privately-held supplemental health insurance provider, for approximately
$218.5 million, subject to closing adjustments. The transaction will be funded internally with cash from Torchmark's insurance subsidiaries and is expected to be immediately accretive to earnings per share with minimal impact, if any, on Torchmark's free cash flow available for stock repurchases or the RBC ratios of the insurance subsidiaries. The transaction is expected to close early in the fourth quarter of 2012.
Founded in 1989 and headquartered in
Cleveland, Ohio, Family Heritage is a specialty insurer focused primarily on selling individual supplemental health insurance products with a return-of-premium feature. Family Heritage has approximately 1,200 captive sales agents, 41 sales directors and over 223,000 policies in force. Statutory admitted assets at
December 31, 2011 were approximately
$488 million, GAAP net income for 2011 was approximately
$21 million, and direct premiums written in 2011 were
"We are excited about the addition of Family Heritage to the Torchmark family," said Torchmark co-CEO's
Gary Coleman and
Larry Hutchison. "This transaction meets the criteria we established when we began looking at possible acquisitions several years ago. Family Heritage offers protection-oriented insurance to middle income families through a captive agency force that we believe we can help grow. The Company has a track record of solid premium growth and strong underwriting margins with a business plan that incorporates a variable-cost marketing structure. We expect a seamless transition, as we have complete confidence in the Family Heritage management team, agents and employees. We look forward to welcoming all of them to Torchmark."
Torchmark expects the transaction to add about
one to three cents to net operating earnings per share in 2012 and approximately
thirteen to seventeen cents per share in 2013.
Torchmark's financial advisor in the transaction is Wells Fargo Securities; Locke Lord LLP is serving as legal advisor to Torchmark. The financial advisor for the owners of Family Heritage is Willis Capital Markets & Advisory and Peter J. Solomon Company; Sidley Austin LLP is serving as their legal advisor.