Horace Mann Educators Corporation (NYSE:HMN) executed a non-binding letter of intent to acquire Madison National Life Insurance Company, Inc. from Independence Holding Company (NYSE:IHC) for approximately $190 million on September 15, 2020. Horace Mann Educators Corporation signed a definitive agreement to acquire Madison National Life Insurance Company, Inc. from Independence Holding Company on July 14, 2021. The consideration includes purchase price of $172.5 million in cash and in addition, if Madison National reaches specified financial targets in 2023, IHC will receive an additional purchase price of up to $12.5 million. The transaction will be funded with about $115 million from cash on hand and about $65 million additional borrowings on the company's revolving credit facility, which is being extended to 2026 and expanded from $225 million to $325 million to provide ample liquidity. After close, Madison National will operate as a wholly owned subsidiary of Horace Mann Educators Corporation. In 2020, Madison National's net premiums were approximately $108 million and statutory earnings were approximately $14 million. IHC also announced that Robert J. Stubbe has been promoted to President of Madison National until the transaction closes. The transaction has been approved by Horace Mann's and IHC's boards of directors. The transaction is subject to regulatory approval, one of which is the approval by the Wisconsin Office of the Commissioner of Insurance, expiration and termination of all waiting periods and other customary closing conditions. The transaction is expected to close early in 2022. Transaction will be immediately accretive to Horace Mann's EPS and ROE. At closing, Horace Mann's leverage ratio is expected to be slightly below 25%, which aligns with levels appropriate for the company's current financial strength ratings. The company will target year-end RBCs of 425% for life and retirement subsidiaries and 400% for property and casualty subsidiaries.

Raymond James & Associates is acting as financial advisor to Horace Mann and Eversheds Sutherland (US) LLP is acting as legal counsel to Horace Mann. Quarles & Brady LLP acted as legal advisor to IHC.

Horace Mann Educators Corporation (NYSE:HMN) completed the acquisition of Madison National Life Insurance Company, Inc. from Independence Holding Company (NYSE:IHC) on January 1, 2022. All conditions to the consummation of the sale were satisfied. The transaction continue to expect 2022 EPS accretion from the transaction to be at least 15 cents to 20 cents with approximately a 50 basis point contribution to ROE and this initial estimate of accretion for Horace Mann only captures Madison's current business activity. We're enthusiastic about the opportunity to quickly deliver growth and additional earnings from an expanded Supplemental & Group Benefits division.