Insurance company Conseco Inc. said Monday that it will concentrate on the retiree market by acquiring all or parts of four life and health insurance companies for about $1.76 billion in cash, stock and debt.
With the acquisitions, about 80% of the business of Carmel, Ind.-based Conseco will be aimed at the retiree market, Chairman Stephen Hilbert said.
The four companies offer policies covering cancer patients, long-term care for the seriously ill and supplements to fill gaps in the federal Medicare program. They also sell life insurance and retirement savings annuities.
About 33 million Americans are 65 or older, and as baby boomers age, that market is expected to double by 2030, Conseco said.
The purchases would increase Conseco's annual revenue to $6.8 billion, more than double last year's.
With its $793-million acquisition of Bensalem, Pa.-based American Travellers Corp., Conseco would become the nation's leading provider of long-term care health insurance, it said. The deal offers Conseco shares valued at between $32 and $35.03 for each American share. American Travellers stock rose $3.1875 to close at $31.5625 on Nasdaq.
The $680-million purchase of Capitol American Financial Corp. of Cleveland would make Conseco No. 2 in the country in three specialty insurance markets: cancer, heart care and intensive care. The Conseco offer is worth $30 in cash and $6.50 in Conseco stock. Capital shares zoomed $9.875 to close at $34.875 on the New York Stock Exchange.
Conseco also plans to spend $117 million to purchase the remaining 9.5% of stock it does not currently hold in Bankers Life Holding Corp. of Chicago, which sells long-term care policies, Medicare supplements, life insurance and annuities. Conseco offered $25 in stock for every Bankers Life share. Bankers Life stock rose $2.375 to close at $24.125 on the NYSE.
The company will pay $165 million to buy the remaining 62% stake it doesn't now own in closely held American Life Holdings Inc. of Des Moines, Iowa, which sells retirement annuities.
Investors signaled their support for the deal, sending the shares of the acquired companies soaring and pushing Conseco shares up $1.6875 to $44 on the NYSE.