Conseco Inc. announced yesterday that two insurance subsidiaries—Conseco Insurance Co. and Conseco Health Insurance Co.—will be merged into a third subsidiary, Washington National Insurance Co. (WNIC).
The company is cognizant of the fact this will incur extra IT costs. “Conseco’s plans to consolidate three of its insurance companies within Conseco Insurance Group will require a number of one-time expenses over the next year, including costs to update IT systems,” Russ Bostick, Conseco’s EVP of technology and operations, tells INN. “While this effort will build capital, simplify the structure of Conseco Insurance Group and generate roughly $2.5 million in annual savings, we anticipate having $8 million in expenses overall related to the consolidation. Within IT, we will dedicate staff to handle the more than 50 systems that will require some degree of change, with the majority of that work expected in our health systems and corporate systems.”
Subject to the approval of insurance regulators in Arizona, California and Illinois, the merger will be completed in the fourth quarter of 2009.
Conseco expects the consolidation to simplify the structure of Conseco Insurance Group, putting nearly half of its inforce business and all of its new sales activity into a single company.
Upon completion of the merger, WNIC (domiciled in Illinois) would have approximately $5.3 billion of statutory assets, 925,000 policies in force, $625 million of annual premiums, and $4.3 billion of statutory policy reserves, comprised of specified disease and other supplemental health policies (58%), annuities and other deposits (33%), and life insurance policies (9%).
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