Great Western Financial has reached a definitive agreement to sell its John Alden Life Insurance operations for $280 million, the Beverly Hills-based financial services company said Tuesday.
The buyers are management investors headed by Glendon E. Johnson, president of John Alden Life.
Great Western Financial said the move reflects its effort to focus on its basic businesses of retail banking, mortgage lending, mortgage banking and consumer finance. Its principal subsidiary is Great Western Bank, one of the country's largest savings and loans.
"Insurance has never been one of our top priorities," Great Western Chairman James F. Montgomery said in explaining the motivation for the sale. "That's all."
John Alden Life, which has about $1.3 billion in assets, earned $12.7 million in 1986.
Celtic Deal Fell Through
The sale will be financed through General Electric Credit Corp. and is expected to close within three to four months. Great Western said it would report an after-tax gain of about $15 million from the sale.
Great Western announced last November that it had hired an investment banking firm to evaluate the possible sale of its insurance unit as well as its commercial leasing operations.
And just last month, Great Western confirmed that it was discussing a possible sale with a Chicago-based insurance firm known as Celtic Group.
But the Johnson-led management offer eventually won out because the deal with Celtic "just didn't materialize," Montgomery said in a telephone interview. The leasing operations remain for sale.
John Alden Life was part of Aristar, which Great Western acquired several years ago largely for its consumer finance businesses.
Great Western Financial has been expanding rapidly in recent months, particularly through the acquisitions of consumer finance offices in the Southeast and savings and loan branches in Florida. The financial institution has $27.7 billion in assets and more than 800 offices nationwide.