Mutual Benefit Sale Of Division OK’d By Potential Buyer’s Parents
TRENTON, N.J. (AP) _ A plan to sell a profitable division of the financially troubled Mutual Benefit Life Insurance Co. for $500 million was approved Tuesday by the potential buyer’s European parent companies.
The agreement to sell Mutual Benefit’s group life, accident and health division to the New York-based AMEV Holdings Inc. is part of a state plan to rehabilitate the insurer.
State regulators seized Newark-based Mutual, the nation’s 18th largest life insurer, last month to avert a run on its cash following worries concerning its real estate portfolio.
The boards of AMEV’s parent companies, N.V. AMEV in the Netherlands and Groupe AG in Belgium approved the sale, officials said.
The sale is now subject to approval by state Insurance Commissioner Samuel Fortunato and state Superior Court Judge Paul Levy.
Fortunato has said he favors the sale, which would give Mutual Benefit a much-needed infusion of cash.
″This is an important step in the rehabilitation process,″ said Jo Astrid Glading, a spokeswoman for the Insurance Department. ″This will be forwarded to the judge within the next two weeks.″
Levy has said he wants to allow a comment period from interested parties who may oppose the tentative sale. The plan may be presented to the judge as early as next week, state and company officials said.
Allen Freedman, chairman and chief executive officer of AMEV Holdings Inc., said in a statement the approval by the parent company boards ″reaffirms our belief that Mutual Benefit Life Group is an excellent strategic fit in AMEV Holdings’ network of specialty insurance and financial service companies.″
He added: ″We also view the board’s approval as a vote of confidence in the financial and operational stability of the MBL Group.″
Mutual Benefit’s group division is based in Kansas City, Mo., where the company employs 1,300 people. Freedman has said AMEV intends to keep the company in Kansas City and would retain Edward Bull as the group arm’s chief executive officer.
Officials from Mutual Benefit and the state have said the tentative agreement will have no immediate effect on the state’s decision to prohibit customers from cashing in their policies.
The state froze the payments in an attempt to prevent a run on the company’s cash, but will allow some emergency withdrawals. Payment of death benefits and health benefits has continued.
Mutual Benefit’s group life insurance division provides policies to 85,000 employers, covering 1.3 million workers.
The division provides disability, life, medical and dental insurance to small and medium-sized employers. It has assets of $1.1 billion.
The potential $500 million sale would provide Mutual Benefit with cash and notes. The breakdown of cash and notes was not disclosed.
AMEV Holdings Inc. was founded in 1978 and is the $3 billion U.S. holding company of the $40 billion combined operations of N.V. AMEV of the Netherlands and Groupe AG of Belgium.
As of June 30, AMEV Holdings Inc. had annual revenues of more than $1.7 billion and shareholder equity of more than $600 million.