American Enterprise Group grows with Great Western Acquisition

An article from the Des Moines Register that you can read here gives some implications on the American Enterprise Group (AEG), a Des Moines based insurer, and its acquisition of Great Western Insurance Company of Utah.  As you recall we made you aware of this acquisition last month on Funeral Director Daily and now that the transaction has closed we will give some more perspective with some information gleaned from the article.

American Enterprise Group was founded in 1929 and their business is concentrated in the senior market.  They have been focused on senior life insurance, medicare supplements, and critical illness policies.  Great Western was founded in 1983 in Utah and has focused on the pre-need funeral market in 46 states and the District of Columbia.

Here’s what AEG CEO Tom Swank said, “This addition ceates a tremendous opportunity for us.  Together we are able to provide a greater solution set to our senior market customers, backed by the financial strength and stability required to support significant growth throughout all lines of business.”

Lisa Gardner, a professor of statistics and insurance at Drake University in Des Moines commented on the acquisition and pre-need market in general, “I would characterize it as a solid niche.  I do think there are opportunities for growth, but I also see some real strong constraints to that growth.”

According to the article here are some facts about the companies:

  • The acquisition will almost double AEG’s policy count from 355,544 policies to 686,674 policies.
  • Assets under management for AEG will now rise from slightly more than $1 billion to about $2.389 billion.
  • Net premiums will increase from about $442 million to $655 million
  • AEG will now employ more than 500 workers at offices in Des Moines, Omaha, and Odgen Utah.

Funeral Director Daily take:  When you see some of these statistics you realize the company that John E. Lindquist built with Great Western since its inception in 1983.

Funeral pre-need insurance is an interesting niche industry.  In my opinion, what can really drive sales for the companies is the relationship that they have with the funeral homes they serve.  AEG will need to go slow in working with Great Western and see how those relationships continue to play out.  You can bet that companies like Funeral Director’s Life, Assurant, and Homesteaders will be looking to get some of Great Western’s funeral home reps working for them and use this acquisition as a way to get in the front door to preach the merits of  of their products.  To that end, AEG is fortunate that Lindquist says he will remain an active member of the company.

As an aside to this article, I participate in a funeral service event every year where John Lindquist also participates.  While only an acquaintance and not what you would call great friends, I really respect the man and am happy for him and all that he has built.  He is one of those guys, no matter how successfull he has became, will speak with anyone on the merits of the funeral industry. . . . a great ambassador for all of us!!!

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