Washington National announces sale of individual health insurance business to Pioneer Financial Services

Business Wire, June 4, 1996

LINCOLNSHIRE, Ill.--(BUSINESS WIRE)--June 4, 1996--Washington National Corp. (NYSE:WNT, WNT/Pr) announced today an agreement to sell its Health Division's individual health insurance business to Pioneer Financial Services Inc. (NYSE:PFS) of Schaumburg, Ill.

The corporation further announced that it intends to sell its large group life and health insurance business.

Robert W. Patin, chairman and chief executive officer, said, "We are pleased with this important step which creates greater operating focus while we continue to explore our strategic options for the remainder of the enterprise. This action emerged from a comprehensive strategic process designed to enhance shareholder value. Although our Health Division has contributed substantially to our earnings improvement and revenue growth, marketplace dynamics no longer support a wide diversification of our businesses. Emphasizing our growing life insurance and education businesses will improve our ability to maximize shareholder value."

Pioneer will purchase the individual health and small group life and health insurance business in a reinsurance transaction for cash consideration of $19 million to be paid at closing. Pioneer will employ certain Health Division employees and will assume certain leases and other obligations of the business.

Washington National also announced it is seeking buyers for its large group life and health insurance business and expects to arrange a sale of that business within 60 days.

Patin said that a major financial benefit of exiting the health insurance business is that regulatory capital, previously required to support the health division business, could now be used for other purposes. Patin indicated that approximately $45 million of capital would become available for other corporate purposes, which might include repurchase of the corporation's stock, investment in the remaining businesses, or a special dividend.

Washington National plans to eliminate certain support positions no longer required once it exits the health insurance business. Washington National Insurance Co.'s defined benefit pension plan will be terminated and the corporation will repurchase 416,000 shares of its common stock and 17,000 shares of its preferred stock held by that pension plan. The corporation expects to post a loss on the exit from the health business of approximately $20 million, after taxes, including expenses associated with the pension plan termination and severance costs.

The remaining businesses are universal life insurance and annuities written exclusively by United Presidential Life Insurance Co., the corporation's Indiana-based insurance subsidiary, and the Education market which is served by Washington National Insurance Co.

Patin said, "United Presidential has shown substantial new sales gains with more profitable products and we expect this progress to continue. The education affinity market also has shown significant potential for additional products and services. While our new sales of traditional disability products to educators have grown rapidly, new products such as long-term care have been well received and we are now planning on further expanding our product offerings to this large and growing affinity market."

The transaction is subject to regulatory approval and is expected to close in the third quarter of 1996.

Washington National Corp. is an insurance holding company with subsidiaries engaged primarily in marketing and underwriting life insurance, annuities, and health insurance for individuals and groups.

CONTACT: Craig Simundza

Vice President, Financial Reporting

847/793-3053