Conseco plans to consolidate two of its insurance subsidiaries into a third one, Washington National Insurance Co., as a means of raising capital and its consolidated risk-based capital ratio.

Jim Prieur

The moves to consolidate Conseco Insurance Co. and Conseco Health Insurance Co. into Washington National Insurance, all part of its Conseco Insurance Group segment, should be completed in the fourth quarter, pending approval from regulators in Arizona, California and Illinois, the company said.

“We expect this merger to provide many benefits, chief among which will be to increase Conseco’s total adjusted statutory capital and our consolidated risk-based capital ratio,” said Conseco CEO Jim Prieur in a statement.

If the merger and the agreement to coinsure a block of non-core life insurance business, announced June 25, had been completed in June, the company’s consolidated risk-based capital ratio would have been 265%, an increase of 18 percentage points, Prieur said

When completed, the Washington National insurance company, domiciled in Illinois, should have about $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%), company officials said.

The merger will further save money as it decreases the amount of financial reporting and related audits, but in the next year, the company expects to spend those savings on new forms, updating its IT system and modifying agent appointments as a result of the changes, company officials said.

In addition, company officials said they look forward to a simpler structure for Conseco Insurance Group, putting nearly half of its in-force business and all of its new sales activity into a single company.