Insurers’ Combined Assets Total $20 Billion : ICH, Southmark to Merge in $240-Million Deal

LOUISVILLE, Ky. — ICH Corp., an insurance holding company here, said Monday that it has agreed to merge with Southmark Corp., a real estate and financial services company based in Dallas, in a stock swap valued at about $240 million.

The combined company will become one of the nation’s largest life insurance companies, with more than $100 billion of insurance in force. Combined assets will exceed $20 billion.

The merger agreement calls for Louisville-based ICH to exchange two shares of its common stock for every three shares of Southmark common stock, the companies said. Based on the current market price of ICH, Southmark shareholders would get stock worth about $5.17 for each of their shares, giving the transaction an indicated value of about $237 million.

Wider Distribution

Southmark will retain its corporate identity. Its chairman, Gene Phillips, will become vice chairman of ICH, while continuing as Southmark’s chief executive.

The merger is subject to approval by both companies’ boards, stockholders, lenders and regulatory agencies.

Phillips said the merger would give Southmark and ICH access to a larger asset base that “can take advantage of more controllable income flows tied with greater investment returns generated through a wide range of investment activities.” Southmark also would gain wider distribution for its financial products.

Southmark assembles various financial packages, such as real estate syndication, that ICH insurance agents could market, according to Steve Bing, ICH senior vice president. “This would give us an opportunity to supply our agents with products we do not currently provide,” Bing said. Its insurance subsidiaries include Massachusetts General, Southern, Southwestern and Philadelphia life insurance companies. Last year it acquired the $1-billion insurance operations of Houston-based Tenneco.

Bigger Stake

ICH is also interested in expanding its annuity business, currently at around $100 million, Bing said, and Southmark handles about $1 billion in annuities each year, reselling some of that business. “We could buy them from them,” he said.

For the year ended June 30, Southmark reported a profit of $85.1 million, down from $94.3 million. ICH posted net income of $98.8 million for nine months ended Sept. 30, down from $105.5 million.