Neenah insurer Equitable Reserve to merge into Modern Woodmen [Milwaukee Journal Sentinel]

May 24--Equitable Reserve Association, a fraternal life insurance company based in Neenah, has signed a letter of intent to combine with Modern Woodmen of America, a fraternal life insurance company based in Rock Island, Ill.

Equitable Reserve, founded in 1897 by a group of businessmen in Neenah, has lost money for the past seven years.

"The biggest difficulty is the low interest environment and lack of economies of scale," said Mel Rambo, the company's president.

About 98% of the company's reserves are invested in investment-grade bonds.

The company had a net loss of $1.5 million last year and a net loss of $1.1 million in 2010, Rambo said. It ended last year with a surplus -- the insurance industry's equivalent of net worth -- of $3.3 million.

Equitable Reserve's 19,000 members would become members of Modern Woodmen once the transaction is completed. Modern Woodmen also would take over Equitable Reserve's operations, assets and liabilities.

The 28 people who work in Equitable Reserve's headquarters in Neenah are expected to lose their jobs once the two companies are combined.

Modern Woodmen, which does not expect to hire additional staff once the transaction is completed, is planning to offer jobs to Equitable Reserve's sales agents.

The transaction is expected to be completed in the fall and must be approved by the Wisconsin Office of the Commissioner of Insurance and the Illinois Department of Insurance.

Equitable Reserve began looking at a variety of options last summer, Rambo said. The decision to combine with Modern Woodmen was made to protect the benefits of Equitable Reserve's members.

"That is our foremost responsibility," he said.

Equitable Reserve, which operates in 12 Midwestern states and the District of Columbia, had $128 million in assets and $505 million of life insurance in force at the end of last year.

Modern Woodmen, founded in 1883, is the third-largest fraternal financial services organization in the United States, with more than 760,000 members, 60 regional offices and more than 800 financial representatives nationwide.

The company had more than $11.4 billion in assets and $34.3 billion of life insurance in force at the end of 2011.

The insurance company has an A+ Superior rating from A.M. Best, an independent rating agency. A+ Superior ranks second highest of 15 ratings.

Equitable Reserve Association, founded as Equitable Fraternal Union, merged with Fraternal Reserve Association in Oshkosh in 1930, Germania Mutual Life Assurance of Wisconsin in 1949 and Royal League of Berwyn, Ill., in 1970.

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