Nassau Reinsurance Group has entered into a definitive agreement to acquire Universal American Corp.'s traditional insurance business. The transaction is expected to close in early 2016.
The Universal American traditional insurance business consists of a closed block of insurance products, including Medicare supplement, other senior health insurance, specialty health insurance, and life insurance, including a non-strategic closed block of long-term care insurance policies. The traditional insurance business includes Universal American subsidiaries Constitution Life Insurance Company and The Pyramid Life Insurance Company, as well as a portion of business written by American Progressive Life & Health Insurance Company of New York.
Under the terms of the agreement, Nassau will acquire in an all-cash transaction all outstanding shares of the Constitution Life and Pyramid businesses, and the remaining portion of the traditional insurance business at American Progressive, for approximately $43 million, subject to purchase price adjustments based on capital and surplus of $68.5 million. Additionally, upon closing, Nassau will fund $20 million in equity capital to support the transaction and strengthen the business moving forward.
Nassau was launched in April 2015 and is an insurance and reinsurance business founded by insurance industry executives Phillip J. Gass and Kostas Cheliotis.
“Nassau is excited to acquire UAM's Traditional Insurance business, providing UAM with a complete solution to exit these business lines,” said Mr. Glass, Nassau's chairman and chief executive officer. “With stable profitability and predictable cash flow, we believe the traditional insurance business is an attractive asset for Nassau that will establish our onshore reinsurance platform, which we intend to grow through additional closed block reinsurance transactions. Further, with the injection of $20 million in new capital, we are bolstering the business' financial strength to support its policyholders and allow for future growth opportunities.”
Richard A. Barasch, the chairman and chief executive officer of Universal American, commented, “Continuing our focus on exiting non-core businesses, we are confident that we have found the right buyer for our traditional insurance business. Nassau provides a unique combination of substantial financial resources, a proven track record of successfully managing insurance and reinsurance businesses, and a long-term commitment to the traditional insurance business.”
The transaction is subject to customary closing conditions and regulatory approvals. Upon closing, the traditional insurance business will become a privately held, wholly owned subsidiary of Nassau. The traditional insurance business, which has approximately 30 employees, will continue to be led by existing management and retain its offices in Lake Mary, Florida, according to Nassau.
Debevoise & Plimpton LLP is acting as legal advisor to Nassau.
Learn more:www.nsre.com; www.UniversalAmerican.com.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].