Pan-American Life acquires Encova’s life insurance affiliate

New Orleans-based Pan-American Life Insurance coverage group, just lately named as among the finest managed firms by Deloitte Personal and the Wall Road Journal, mentioned it has acquired the life insurance coverage arm of Encova Mutual Insurance coverage Group of Columbus, Ohio.

Phrases of the acquisition weren’t disclosed however Pan-American projected it could add $60 million in annual revenues, which included $38 million in insurance coverage premiums from 83,000 insurance policies. It must also propel Pan-American’s property by $600 million.

Pan-American is a 110-year-old supplier of life, accident, and medical insurance, working in 49 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and all through Latin America and the Caribbean. It employs greater than 2,100 folks and covers greater than 7 million policyholders.

Firm executives mentioned the Encova buy was in step with its enterprise technique.

Acquisition aligned with ‘U.S. progress technique’

“This acquisition is aligned with our U.S. progress technique and demonstrates our dedication to the U.S. market and to our complete life enterprise,” mentioned José Suquet, Pan-American’s chairman and CEO.

The transaction was unanimously accepted by each firm boards of administrators final week and is predicted to shut by the top of the 12 months.

“We’ve got had sturdy success in our property and casualty operations as evidenced by our latest AM Finest improve, and we need to focus solely on leveraging this latest P&C success.” mentioned Encova Insurance coverage President and CEO TJ Obrokta Jr. “We stay dedicated to our company companions, and we are going to assist guarantee this transition to Pan-American Life is a clean course of for our life brokers and policyholders.”

Though all Encova Life insurance policies shall be assumed by Pan-American, the corporate mentioned present policyholders ought to discover no modifications to product phrases or options.

Encova is super-regional provider ranked within the high 20 mutual insurance coverage firms within the U.S., and employs greater than extra 1,100 associates writing in 28 states and Washington, D.C. Its premiums whole in extra of $1 billion, a surplus in extra of $1.96 billion and property in extra of $4.8 billion. The group markets insurance coverage options via greater than 2,000 impartial businesses within the Midwest, Northeast and South.

Acquisition may spark business pattern

The acquisition/merger may spark an business pattern, say some analysts. After a record-breaking 2021, transaction volumes collapsed, falling 27% in 2022 from the earlier 12 months, and values plummeted 69%, in response to a Deloitte evaluation.

Persevering with financial uncertainty, accelerating inflation, and rising capital prices put numerous insurance coverage firm merger plans on the again burner. However with the Federal Reserve slacking off on its aggressive price hikes, the pendulum might swing, Deloitte mentioned.

“When charges settle, we anticipate to see firms start deploying capital for acquisitions,” mentioned the latest Deloitte report. “ M&A exercise will occur, however with subdued frequency and at decrease costs in comparison with the upper valuations in 2021.”

The report mentioned it expects the insurance coverage brokerage to be the primary sector to get well, given its excessive deal quantity and attraction to personal fairness traders.

“The truth that non-public fairness curiosity waned solely barely final 12 months means that monetary patrons view brokerage positively regardless of rising rates of interest and consider that longer-term progress will offset any enhance in deal price,” Deloitte mentioned. “Within the interim, nonetheless, brokerage seems to be influenced by insurance coverage M&A softness general.”

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However, Deloitte predicts the insurance coverage M&A market will get well absolutely this 12 months or early subsequent.


Doug Bailey is a journalist and freelance author who lives exterior of Boston. He might be reached at [email protected].

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