HC2 Portfolio Company Continental General Insurance Completes Acquisition of $2.4 Billion Long-Term Care Insurance Business F...
August 09 2018 - 4:30PM
HC2 Holdings, Inc. ("HC2") (NYSE: HCHC), a diversified holding
company, announced today that its insurance subsidiary, Continental
General Insurance Company ("CGIC"), has completed its acquisition
of the long-term care ("LTC") insurance business KMG America
Corporation ("KMG") from Humana Inc. (NYSE:HUM).
As of March 31, 2018, KMG's subsidiary, Kanawha
Insurance Company ("Kanawha"), had approximately $150 million in
statutory surplus and approximately $160 million of statutory total
adjusted capital with approximately $2.4 billion of cash and
invested assets. Under the terms of the Stock Purchase Agreement,
Humana made an approximate $195 million cash capital contribution
to KMG's subsidiary Kanawha Insurance Company prior to closing.
Post-close, CGIC will have cash and invested
assets of approximately $3.8 billion, up from $1.5 billion prior to
the transaction. Upon completion of the transaction, pro-forma
statutory surplus for the combined entities is estimated to be
between $155 - $175 million and total adjusted capital is estimated
at between $185 - $205 million, subject to closing adjustments.
"Completing the acquisition of Humana's
long-term care insurance business marks another significant
milestone in the growth of our insurance subsidiary and
significantly increases the size of our insurance investment
portfolio and more than doubles our total adjusted insurance
capital base from approximately $85 million to the estimated $185
million to $205 million, providing incremental value to our
shareholder base," said Philip Falcone, Chairman, President and
Chief Executive Officer of HC2. "We believe this transaction
validates our platform and positions us as the counterparty of
choice for future LTC transactions."
Please refer to HC2's Current Report on Form 8-K
that was filed on November 7, 2017 with the Securities and Exchange
Commission for a more complete description of the terms and
conditions of the Stock Purchase Agreement.
Keefe, Bruyette & Woods, Inc. acted as
financial advisor to Continental General Insurance Company. Drinker
Biddle & Reath LLP acted as legal advisor to Continental
General Insurance Company.
About HC2
HC2 Holdings, Inc. is a publicly traded (NYSE:
HCHC) diversified holding company, which seeks opportunities to
acquire and grow businesses that can generate long-term sustainable
free cash flow and attractive returns in order to maximize value
for all stakeholders. HC2 has a diverse array of operating
subsidiaries across eight reportable segments, including
Construction, Marine Services, Energy, Telecommunications, Life
Sciences, Broadcasting, Insurance and Other. HC2's largest
operating subsidiaries include DBM Global Inc., a family of
companies providing fully integrated structural and steel
construction services, and Global Marine Systems Limited, a leading
provider of engineering and underwater services on submarine
cables. Founded in 1994, HC2 is headquartered in New York, New
York. Learn more about HC2 and its portfolio companies at
www.hc2.com. For information on HC2 Holdings, Inc., please contact
Andrew G. Backman - Managing Director - Investor Relations &
Public Relations - abackman@hc2.com - 212-339-5836
Cautionary Statement Regarding
Forward-Looking Statements
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995: This release contains,
and certain oral statements made by HC2's representatives from time
to time may contain, forward-looking statements. Generally,
forward-looking statements include information describing actions,
events, results, strategies and expectations and are generally
identifiable by use of the words "believes," "expects," "intends,"
"anticipates," "plans," "seeks," "estimates," "projects," "may,"
"will," "could," "might," or "continues" or similar expressions.
The forward-looking statements in this press release include,
without limitation, statements regarding HC2's expectation
regarding building shareholder value and future cash and invested
assets. Such statements are based on the beliefs and assumptions of
HC2's management and the management of HC2's subsidiaries and
portfolio companies. HC2 believes these judgments are reasonable,
but you should understand that these statements are not guarantees
of performance or results, and HC2's actual results could differ
materially from those expressed or implied in the forward-looking
statements due to a variety of important factors, both positive and
negative, that may be revised or supplemented in subsequent reports
on Forms 10-K, 10-Q and 8-K. Such important factors include,
without limitation, issues related to the restatement of HC2's
financial statements; the fact that HC2 has historically identified
material weaknesses in its internal control over financial
reporting, and any inability to remediate future material
weaknesses; capital market conditions; the ability of HC2's
subsidiaries and portfolio companies to generate sufficient net
income and cash flows to make upstream cash distributions;
volatility in the trading price of HC2 common stock; the ability of
HC2 and its subsidiaries and portfolio companies to identify any
suitable future acquisition opportunities; HC2'sability to realize
efficiencies, cost savings, income and margin improvements, growth,
economies of scale and other anticipated benefits of strategic
transactions; difficulties related to the integration of financial
reporting of acquired or target businesses; difficulties completing
pending and future acquisitions and dispositions; effects of
litigation, indemnification claims, and other contingent
liabilities; changes in regulations and tax laws; and risks that
may affect the performance of the operating subsidiaries and
portfolio companies of HC2. Although HC2 believes its expectations
and assumptions regarding its future operating performance are
reasonable, there can be no assurance that the expectations
reflected herein will be achieved. These risks and other important
factors discussed under the caption "Risk Factors" in HC2's most
recent Annual Report on Form 10-K filed with the Securities and
Exchange Commission ("SEC"), and HC2's other reports filed with the
SEC could cause actual results to differ materially from those
indicated by the forward-looking statements made in this press
release.
You should not place undue reliance on
forward-looking statements. All forward-looking statements
attributable to HC2 or persons acting on its behalf are expressly
qualified in their entirety by the foregoing cautionary statements.
All such statements speak only as of the date made, and unless
legally required, HC2 undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
For information on HC2 Holdings, Inc., please
contact:
Andrew G. BackmanManaging DirectorInvestor Relations &
Public Relationsabackman@hc2.com212-339-5836
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