Acquisitions

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions

AcquisitionsEffective January 1, 2022, the Company acquired all the equity interests in Madison National pursuant to a Stock Purchase Agreement (Agreement) dated as of July 14, 2021. The final adjusted purchase price of the transaction was $172.3 million. The seller of Madison National has a potential earn-out of up to $12.5 million payable in cash, if specified financial targets are achieved by the end of 2023. As a result of the acquisition, Madison National became a wholly owned subsidiary of the Company. Madison National is a leading writer of employer-sponsored benefits provided to educators by K-12 school districts. Founded in 1961 and headquartered in Madison, Wisconsin, Madison National offers short-term and long-term group disability, group term life, and worksite solutions products, including accident and critical illness.

Madison National's results are being reported in the reporting segment titled "Supplemental & Group Benefits". The amount of revenues and pretax income for Madison National since the date of acquisition included in the Company's Consolidated Statement of Operations and Other Comprehensive Income (Loss) for the year ended December 31, 2022 are $140.9 million and $13.8 million (inclusive of the $4.7 million non-cash impact from amortization of intangible assets under purchase accounting), respectively.

During the fourth quarter of 2022, the Company finalized its estimates of the fair value of Madison National assets acquired and liabilities assumed, including, but not limited to, intangible assets, policy reserves, certain tax-related balances and certain investments. In accordance with Accounting Standards Codification (ASC) 805, Business Combinations, there were no adjustments to the preliminary estimates of the assets acquired and liabilities assumed. The Company has allocated all of the goodwill associated with the Madison National acquisition to the Supplemental & Group Benefits reporting segment. The factors that contributed to recognition of goodwill include synergies from economies of scale within underwriting operations, acquiring a talented workforce and cost savings opportunities.

Based on the Company's final allocation of the purchase price, the fair value of the assets acquired and liabilities assumed were as follows:

($ in millions)
Assets:
Investments	$	90.4
Cash and short-term investments	123.4
Reinsurance recoverable	356.0
Intangible assets(1)	59.4
Other assets	23.2
Liabilities:
Investment contract and policy reserves	274.5
Unpaid claims and claim expenses	48.2
Unearned premiums	1.5
Other policyholder funds	152.8
Other liabilities	15.9
Total identifiable net assets acquired	159.5
Goodwill(2)	12.8
Purchase price	$	172.3

(1)    Intangible assets consist of the value of business acquired, value of customer relationships and state licenses. The intangible assets that are amortizable have estimated lives of one to ten years at inception. See Note 7 for further information.

(2)    The amount of goodwill that is expected to be deductible for federal income tax purposes is $18.6 million.