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Ohio National to be acquired by Canadian entity in billion-dollar deal

Insurance Forums Staff

Ohio National soon won’t be an independent company for the first time in its 112-year history.

The Cincinnati-based insurer has entered into an agreement to be acquired by Constellation Insurance Holdings, a Canadian insurance holding company targeting acquisitions of life and P&C insurers based in North America, in a billion-dollar deal announced March 23.

The deal will take Ohio National from a mutual company controlled by policyholders to a stock company. Constellation will take ownership of Ohio National’s newly issued stock.

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Ohio National will continue to operate independently, according to President and CEO Barbara Turner.

Barbara Turner
Barbara Turner

“Over the past several years, we have been taking deliberate actions to ensure that our business is well positioned for the future and that our policyholders and associates are part of a stable and growing company,” Turner said in a statement. “In the midst of a challenging economic environment, historically low-interest rates, increased regulatory costs and pressure for the entire industry, Ohio National is taking this next logical step to fortify the business with additional capital and a more flexible capital structure. This will further unlock our opportunities and enable us to mitigate risk while investing in the future growth of the business.”

Turner continued, “For our associates, network of financial professionals, policyholders and the community, the solidified capital structure and increased flexibility afforded by this transaction enhance the inherent value of our Company. It also expands our ability to seize growth opportunities and respond to varying market conditions, resulting in a stronger, more responsive and innovative company that is well positioned for the future.”

Ohio National officials said there would be no layoffs for its 950 employees (mostly in the Cincinnati region) as a result of the takeover. Upon closing of the transaction, Ohio National will maintain its management team and brand, and will continue to be headquartered in the Cincinnati region.

This will be the inaugural transaction for Constellation, which is backed by institutional investors Caisse de dépôt et placement du Québec (CDPQ) and Ontario Teachers’ Pension Plan Board (Ontario Teachers’). Constellation has a strategic intent of building a substantial, highly rated and conservatively managed multi-line insurance business backed by long-term institutional capital.

The acquisition of Ohio National Mutual Holdings, Inc. (ONMH) and its wholly owned subsidiary Ohio National Financial Services, Inc. (collectively, Ohio National) for a total consideration of U.S. $1 billion, includes both member consideration and new capital infused in the business, as part of its demutualization process.

Ohio National policyholders (who own the company) will get $500 million in cash or policy benefits in exchange for extinguishing their membership interest. Upon closing, Constellation will infuse another $500 million over four years to help grow the business.

Established in 1909, Ohio National is a leading provider of financial products and services that helps its policyholders achieve financial security and independence. It has a network of financial professionals operating across 49 states and, as of December 31, 2020, its affiliated companies have U.S. $41.2 billion in assets under management.

“Today’s announcement marks an important first step for Constellation, as we deliver on our strategy to provide North American stock and mutual insurers access to long-term growth capital, enhanced ratings, scale efficiencies and aligned equity incentives, while preserving the independence, brand, existing operations and culture for which they are recognized. We welcome CDPQ and Ontario Teachers’ upsized long-term capital commitment to continue to expand the platform in North America,” said Anurag Chandra, Founder, Chairman & CEO of Constellation.

“Constellation is a uniquely positioned platform, combining long-term capital and deep industry experience to offer differentiated solutions in an increasingly consolidated market. By working closely with Constellation since our initial investment and expanding our commitment alongside a trusted investment partner, Ontario Teachers’, we aim to support insurers who are navigating a complex environment, such as Ohio National, as they embark upon the next phase of their growth,” said Martin Laguerre, Executive Vice-President and Head of Private Equity and Capital Solutions, CDPQ.

The transaction is subject to customary conditions, including regulatory approvals, the approval of the Ohio Director of Insurance and ONMH’s member approval.

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