Guardian Life Insurance Company of America Acquires First Commonwealth Inc.

Strategic Insights -

Guardian Life Insurance Company of America has made significant progress in its acquisition of First Commonwealth Inc., with Missouri and Arizona becoming the last two states required to approve the deal. The acquisition, which was announced in May, will see Guardian acquire all outstanding shares of First Commonwealth for $25 a share in cash. The deal is valued at $92 million and is expected to extend Guardian's managed dental health maintenance organization business nationally. The acquisition is a strategic move for Guardian, which is expanding its group insurance business to broaden the employee benefits portfolio it offers to small and mid-size employers.

Key Takeaways:

  • Guardian Life Insurance Company of America has acquired First Commonwealth Inc. for $92 million, with all outstanding shares being tendered at $25 a share in cash.
  • The acquisition represents a strategic move for Guardian to expand its group insurance business and broaden the employee benefits portfolio it offers to small and mid-size employers.
  • First Commonwealth Inc. provides dental managed care plans, indemnity and dental PPO products, and reported annual revenues of about $64 million in 1998.
  • Guardian and its subsidiaries offer a variety of financial products and services, including individual life and disability-income insurance, employee benefits, pensions, funding vehicles for 401(k) plans, and asset-accumulation products.
  • Guardian wrote $5.82 billion in net premiums last year across all its product lines and had year-end capital and surplus of $2.44 billion.
  • First Commonwealth's stock was trading at $24.75 a share Monday afternoon, an increase of 62% since the beginning of May.
  • The acquisition will extend Guardian's managed dental health maintenance organization business nationally.

Statistics:

  • 3.4 million shares of common stock of First Commonwealth had been tendered in connection with the offer, representing 91.2% of the outstanding shares of First Commonwealth common stock.
  • 84.3% of First Commonwealth's shares on a fully diluted basis had been tendered.
  • $5.82 billion: the amount of net premiums written by Guardian last year across all its product lines.
  • $2.44 billion: the year-end capital and surplus of Guardian.
  • 3.4 million: the number of shares of common stock of First Commonwealth tendered in connection with the offer.
  • 91.2%: the percentage of outstanding shares of First Commonwealth common stock that had been tendered.
  • $25: the price per share at which First Commonwealth's stock will be acquired.

Sources:

  • BestWire, Aug 02, 1999
  • BestWeek, May 24, 1999
  • Best's Review (By Sally Whitney, senior associate editor, Best's Review: whitnes@ambest.com )
  • A.M. Best Co. data
  • COMTEX (http://www.comtexnews.com)