Industrial Alliance buys Texas insurer

Industrial Alliance Insurance and Financial Services has struck a deal to buy Texas-based American-Amicable Holding, Inc. for C$145 million in cash. The deal is subject to the regulatory approvals and expected to close in the summer of 2010.

“This agreement with American-Amicable is an important milestone in our U.S. growth strategy,” said Yvon Charest, president and CEO of Industrial Alliance. “Building on our local operations in Scottsdale, Arizona, it provides us with the scale and presence to accelerate our U.S. growth plan.”

American-Amicable focuses on the middle-income market, which Charest says is underserved in the U.S.

The transaction will be carried out through IA American Life Insurance Company, IA’s U.S. subsidiary. Upon closing of the deal, American-Amicable will become a wholly-owned subsidiary of IA American.

“Strategically and operationally, this is an excellent fit for both American-Amicable and Industrial Alliance,” said Mike Stickney, president of IA American. “It brings together two organizations with long track records of profitable growth that share philosophies of prudent risk management and cost efficiency.”

American-Amicable is based in Waco, Texas and has about 115 employees, all of whom are expected to remain with the firm. It operates through four Texas-domiciled subsidiaries: Pioneer Security Life Insurance Company, American-Amicable Life Insurance Company of Texas, Pioneer American Insurance Company and Occidental Life Insurance Company of North Carolina.

The company is licensed to sell life insurance in 49 states and territories, and its products are marketed through a network of more than 6,000 independent agents. Its primary markets are Texas, Puerto Rico, California, Illinois, Alabama and North Carolina.

The company currently has $7.1 billion of life insurance in force, with a policy base of more than 211,500. Total premiums in 2009 were $86 million and total assets were $687 million.

The purchase is expected to be immediately accretive to IA’s earnings, adding $0.05 per share on an annual basis.

(04/28/10)