Who bought mutual life insurance company?

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December 17, 1991, Section D, Page 3Buy Reprints

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The Phoenix Mutual Life Insurance Company and the Home Life Insurance Company said yesterday that they had agreed to merge, creating the nation's 13th-largest mutual life insurance company, with assets of nearly $11 billion.

It is the first merger between two major mutual life insurance companies and comes at the close of an extremely traumatic year for the industry. Troubled by bad real estate and troubled junk bonds, several major life insurers were seized by regulators.

The combined insurer, to be based in New York, would rank among the nation's top 25 life insurance companies.

Home Life's board met in New York and Phoenix Mutual's board met at its headquarters in Hartford to approve a transaction that they have been discussing for nearly a year.

"We're convinced the future will belong to the insurers whose strength and efficiency enables them to offer superior value to policyholders. Phoenix Home Life will be such a company," said John Gummere, the chairman and chief executive of Phoenix Mutual.

Officials hope the combination will reduce expenses by about $70 million a year. The merger is expected to result in large-scale layoffs, but the companies said much of the staff reductions would be achieved through attrition.

A mutual insurance company is owned by its policyholders, so the combined concern's 700,000 policyholders will have to vote on the plan. The deal is also subject to approval by state regulators in Connecticut and New York.

Officials hope to close the deal by next summer.

Phoenix Mutual will apparently dominate the new company, called the Phoenix Home Life Mutual Insurance Company.

Two of the concern's top three management positions will be given to Phoenix Mutual executives, with Mr. Gummere becoming chairman and chief executive. Home Life will close its New York office and make further cuts in payrolls at its offices in Piscataway, N.J. The company now employs more than a thousand people.

Phoenix Mutual, the nation's 14th- largest mutual insurance company, has 1,500 employees.

When word appeared last January that the two companies had held preliminary talks about a possible merger or joint venture, Mr. Gummere said the main purpose of such a deal would be to "expand our distribution system for our product and enhance value for our policyholders."

Steve Bruce, a spokesman for the combined company, declined to say whether the merger was intended to protect against the troubles that have hurt the industry. Executives stressed that the talks were not precipitated by financial troubles, though both companies have large real estate portfolios.

Phoenix Mutual has 400,000 policyholders. The company offers business and personal life insurance products, employee benefits, group pension and individual investment products.