Universal American To Sell Traditional Insurance Unit;Announces Special Dividend

(RTTNews) - Universal American Corp. (UAM) announced that it has entered into a definitive agreement to sell its Traditional Insurance business to Nassau Reinsurance Group Holdings, L.P.. Universal American's Traditional Insurance business includes its Medicare Supplement, Long Term Care, Disability, Life, and other ancillary insurance products, all of which have been in run-off since 2012.

Under the terms of the agreement, Nassau will acquire 100% of Constitution Life Insurance Company and The Pyramid Life Insurance Company, as well as the Traditional Insurance business written by American Progressive Life & Health Insurance Company of New York. The purchase price is approximately $43 million, subject to adjustments based on capital and surplus at closing.

Universal American will also be entitled to receive potential earn-out payments through June 30, 2018 that may result in additional payments of between $13 million and $24 million.

The transaction is estimated to generate an after-tax loss of approximately $150 million, including the write-off of approximately $53 million in intangible assets.

The closing of the agreement is expected in early 2016 subject to customary closing conditions, including regulatory approval from the Texas, Kansas and New York insurance departments. Upon closing, Nassau will fund an additional $20 million in equity capital to support the transaction and strengthen the business moving forward.

Universal American also announced that its Board approved the payment of a special cash dividend of $0.75 per share, payable on October 26, 2015 to shareholders of record on October 19, 2015. As of September 30, 2015, there were approximately 84 million shares of common stock outstanding.

Universal American also announced that it will repay the outstanding balance on its term loan of $44.9 million and terminate its credit facility, including the unused revolver, effective October 14, 2015.