CARMEL, Ind. -- Conseco Inc. said yesterday that it will buy two insurance companies and boost its stakes in two others for $2.04 billion as it seeks to become a stronger life and health insurance force.
The company plans to buy American Travellers Corp. and Capitol American Financial Corp. for $1.47 billion, and purchase the 62 percent of American Life Holdings Inc. it doesn't own for $445 million in cash and assumed debt. Conseco also intends to spend $117 million in stock for the remaining 9.5 percent of life and health insurer Bankers Life Holding Corp.
The moves are expected to make Conseco the top U.S. provider of long-term health-care coverage and the nation's second largest seller of cancer policies behind Aflac Inc.
The acquisitions are the latest in an industry consolidating to compete with banks and mutual funds for the retirement savings of graying baby boomers.
Conseco is positioning itself to be a key provider of boomers' health care.
Conseco stock rose $1.69 to a record $44, while American Travellers stock rose $3.19 to a record $31.56. Cleveland-based Capitol American rose $9.88 to a record $34.88, and Bankers Life Holding, based in Chicago, rose $2.38 to $24.13, its highest level since September 1994.
The total value of the planned purchases dwarf Conseco's expected acquisition of Life Partners Group Inc. for $840 million in stock and assumed debt, a deal announced earlier this year. The acquisitions follow Conseco's failed attempt to buy Kemper Corp. in late 1994, which was a rare setback for acquisition-oriented Conseco.
Assuming the transactions are completed by year's end, as expected, Conseco's operating earnings would reach the previously announced goal of $5 a share, fully diluted, better than analysts' expectations of $4.25 to $4.65, said Stephen Hilbert, Conseco chairman.
Upon completion, Carmel, Ind.-based Conseco will have $30 billion in assets under management, $6.8 billion in annual premiums and revenue, and $650 million of projected annual earnings before interest and taxes.
Pub Date: 8/27/96