Tennessee-based Unum has agreed to buy Baton Rouge-based Starmount Life Insurance Co. and AlwaysCare Benefits, a dental and vision benefits company, for $127 million plus net assets.
Starmount, founded by the Sternberg family in 1983, covers more than 940,000 people nationally and has annualized premiums in excess of $180 million. Starmount will remain headquartered in Baton Rouge and become the dental and vision hub for Unum US. Chairman and Chief Executive Officer Erich Sternberg and President Deborah Sternberg will continue to head Starmount and AlwaysCare.
“This is a great thing for Baton Rouge and south Louisiana. Unum was number 279 on the last Fortune 500 list, so we’re bringing another Fortune 500 company to Baton Rouge at a time when Baton Rouge needs big employers,” Erich Sternberg said.
Unum plans to grow Starmount to a $1 billion in revenue in 10 years, he said. Achieving that kind of growth will also mean adding employees.
In 1998, when Sternberg started at Starmount, the company had 20 employees and revenue of $3 million. Now the company has more than 230 employees and more than $180 million in premiums.
“I don’t necessarily think the growth trajectory will be the same as that, because we had gone from startup to mid-sized company,” Sternberg said. “I think that the opportunity here will substantially grow the employee base, over the period of years, quite substantially.”
Adam Knapp, president and CEO of the Baton Rouge Area Chamber, said the Sternbergs say Unum bought Starmount to grow it.
“That’s exciting for Baton Rouge and probably exciting for the future of this company as well,” Knapp said.
Starmount sells individual coverage under the Starmount Life brand, including dental, vision, life and accident plans. Its group and voluntary benefits are marketed under the AlwaysCare Benefits brand and include dental, vision, life, disability, critical illness and accident coverage.
Unum provides financial protection benefits at work, including disability, life and supplemental health products. The company has 9,400 employees worldwide and generated a profit of $867.1 million, or $3.50 a share, on $10.7 billion in revenue in 2015.
Under the deal announced Monday, Unum will acquire H&J Capital LLC, the parent company of Starmount and AlwaysCare. Unum President and CEO Rick McKenney described Starmount as “a perfect fit” for the Unum US and Colonial Life businesses.
Unum will roll out the Starmount coverage through Unum and Colonial Life sales networks over 2017 and 2018. A key part of the Starmount growth strategy involves leveraging Unum’s and Colonial Life’s national sales organizations.
Meanwhile, Unum US President Mike Simonds said the acquisition will help the company expand access to dental and vision insurance, which are in strong demand. Unum expects to close the deal by the end of the third quarter.
The idea to sell emerged from a family conversation, Sternberg said. The family wanted to turn Starmount into a billion-dollar business, but doing so with all that’s happened in health care would require a much larger platform.
The Sternbergs began looking for a partner a few months ago, and the deal with Unum came together quickly, he said.
Follow Ted Griggs on Twitter, @tedgriggsbr.