EMC Insurance Cos. announced in December that it had entered into a definitive agreement to sell EMC’s ownership interest in EMC National Life Insurance Co., also known as EMC Life, to Avocet Partners.

EMC Life’s holding company, EMC National Life Mutual Holding Co., also intends to sell its ownership interest in EMC Life to Avocet Partners corresponding with the holding company’s demutualization.

The demutualization of the holding company is a legal process where the mutual holding company is converted to a stock company through a plan of conversion, and is necessary to complete the sale transaction, a spokesperson for EMC said in an email. EMC National Life Mutual Holding Co. will demutualize as a part of the transaction, but EMC Insurance will be unchanged and maintain its mutual structure. 

We sat down with Todd Strother, EMC executive vice president and chief legal officer, to talk more about the sale. His responses have been lightly edited.

Why did EMC decide to sell EMC Life?

For the past couple of years, we’ve been engaging in some pretty deep strategic planning relating to the Life company, both for its growth and for its long-term success and longevity as a company. As part of that planning, we were discussing different scenarios, different alternatives. Are there different products or services we could add? But one of the alternatives we started talking about was, might it be in the best interest of both companies, so both EMC and EMC Life, to look for a different parent company, one that was more deeply invested in the life and annuity space, and that could be more focused on that for [the] life company.

In talking about that we had a key point or non-negotiable. And that was, it had to be a win-win. And what I mean by that is this wasn’t EMC just getting rid of a company. This was, if we were going to go this route, it had to be in the best interest of both EMC and EMC Life company. And in particular, we wanted to take care of our team members on the Life company side. If we were going to find a buyer, we were looking for a company that would keep all of the employees, and weren’t really looking for somebody that would come in buy the company and then eliminate jobs, as you often see when these things happen.

We hired an investment banker to help us explore the market to see if that’s even out there. And they introduced us to Avocet, and it really turned out to become a perfect fit for what we were looking for. It’s a newly formed company, but by some very seasoned executives in the life and annuity space, and they were looking for a life insurance company that they could come in and buy continuous existing operations, but also invest in it to add products and services and grow the company. And then, of course, perfectly, they were looking for someone where they would keep all of the employees. They needed the management team, they needed the employees, and so somebody that would commit to keeping them all on board.

As we dug into it and looked at it, we really decided this is what we were talking about. This is that win-win. So from EMC’s standpoint, it allowed us to pursue the strategy of focusing on our core offerings. It was a win for the life company because they are getting a parent company that is more focused in the life and annuity space, who intends to invest in the company to grow and add new products and services, and who wanted to retain all the employees. It’s a win for the policyholders of the life company because they’re getting some new owners and very financially sound. In addition to keeping their policies, they’re going to get a payout for their ownership interests as part of this, and then we really saw it as a win for Des Moines, because from the standpoint of the city, it is keeping the employees, and keeping them here, and they’re looking to grow the company and grow the employee base. Ultimately, the management teams and the boards of both companies determined that was in the best interest of both companies to proceed with the sale.

How did you decide to sell to Avocet?

They brought us several options. It wasn’t that we just looked at one and one only, but they brought us several options. Avocet just turned out to be the best fit for what we wanted.

Can you talk about what business lines you’re going to focus on, and are there any new areas you’re planning to expand into?

Our primary business has always been commercial property and casualty insurance. So commercial property, commercial auto, general liability, workers compensation and bonds, that has always been our primary focus. That has always been the large bulk of our business. When we look at the numbers … those primary lines are much, much larger than what the life insurance company operation is. Now there’s no plans to say, ‘Well, now that we’ve done this, we’re going to go get into something different.’ It’s really just an opportunity to continue our focus on our primary business lines.

Will this move help position the company for growth?

We’re always positioned for growth. We would have been positioned for growth with or without this life transaction. Growth is always part of our strategic plan, to grow both in the Midwest and throughout the country. When you look at your core business offerings, it’s always a good business objective to focus in on what you do best, and I think that’s what this really is.