US insurance holding company Constellation has entered into an agreement to acquire Ohio National Mutual Holdings and its subsidiary Ohio National Financial Services for a total consideration of $1 billion.
The transaction sees Constellation fund cash payments or policy benefits, in the aggregate amount of $500 million, to be paid or provided to eligible members in exchange for the extinguishment of their membership interests in ONMH.
Additionally, as part of the transaction, Constellation and its investors are providing a commitment to infuse an additional $500 million of capital over a four-year time period following the closing of the transaction, further strengthening Ohio National’s capital position and its ability to fulfill its obligations, as well as to invest in the future of the business.
“Today’s announcement marks an important first step for Constellation, as we deliver on our strategy to provide North American stock and mutual insurers access to long-term growth capital, enhanced ratings, scale efficiencies and aligned equity incentives, while preserving the independence, brand, existing operations and culture for which they are recognized,” affirmed Anurag Chandra, Founder, Chairman & CEO of Constellation.
“We welcome CDPQ and Ontario Teachers’ upsized long-term capital commitment to continue to expand the platform in North America.”
Barbara A. Turner, President and Chief Executive Officer of Ohio National, added, “Over the past several years, we have been taking deliberate actions to ensure that our business is well positioned for the future and that our policyholders and associates are part of a stable and growing company.
“In the midst of a challenging economic environment, historically low-interest rates, increased regulatory costs and pressure for the entire industry, Ohio National is taking this next logical step to fortify the business with additional capital and a more flexible capital structure. This will further unlock our opportunities and enable us to mitigate risk while investing in the future growth of the business.”