Western National Corporation Announces Sale of Conseco's Interest in Western National to American General Corporation

Strategic Insights -

Western National Corporation has announced that agreements have been entered into providing for the sale of Conseco's 40% interest in Western National to American General Corporation. This transaction, valued at $274 million, is subject to regulatory approvals and is expected to be consummated by year end. The sale marks a significant development for Western National, which has been perceived as being in limbo since Conseco announced the possible sale of its remaining 40% five months ago. As part of the agreement, American General has entered into a four-year shareholder agreement with Western National, which includes provisions for the naming of directors and the purchase of additional shares.

Key Takeaways:

  • Western National Corporation has agreed to sell Conseco's 40% interest in Western National to American General Corporation for $274 million.
  • The transaction is subject to regulatory approvals and is expected to be consummated by year end.
  • American General has entered into a four-year shareholder agreement with Western National, which includes provisions for the naming of directors and the purchase of additional shares.
  • The agreement also permits the termination of the investment services arrangement between Conseco and Western National as early as mid-1996 without penalty, compared to the current 10-year agreement with a 5-year penalty period.
  • Western National will reduce the investment services management fee it charges Conseco from 18 basis points to 10 basis points annually on January 1, 1995.
  • The agreement will require American General to vote its Western National shares either pro rata in the election of directors with those votes cast by other Western National shareholders, or for the slate of directors recommended by Western National's board.

Statistics:

  • Transaction value: $274 million
  • Percentage of Western National shares held by Conseco: 40%
  • Number of Western National shareholders: 12,000
  • Assets of Western National Life Insurance Company: $8.5 billion
  • Ranking of Western National Life Insurance Company among life insurance companies in the United States: 50 largest
  • Year of Western National Corporation's initial public offering: 1994
  • Date of Conseco's initial announcement of possible sale: 5 months prior to the announcement

Sources:

  • Business Wire, December 2, 1994
  • Western National Corporation, headquarters in Houston, parent of Western National Life Insurance Company.