The addition of Madison National Life Insurance Co. Inc. will contribute to Horace Mann Educators Corp.'s sustainable double-digit return on equity and provide immediate market expansion, according to company executives.

Horace Mann on July 14 announced that it will acquire Madison National Life from Independence Holding Co. for $172.5 million. The transaction, which is expected to close in the first quarter of 2022, includes all in-force policies and premiums for short-term and long-term group disability, group term life and a variety of smaller group products, including vision and dental.

The transaction will be immediately accretive to Horace Mann's EPS, according to the company, adding 15 cents to 20 cents in the first year.

Horace Mann President and CEO Marita Zuraitis during a conference call to discuss the deal said there is not a significant amount of overlap between the products the two companies sell, though they do have similar end clients. Madison National sells to educators through their school districts, while Horace Mann targets them through their agents, she said.

"So now whether an educator buys coverage themselves or they get it at work, we've got them covered," Zuraitis said, describing Madison National's products as "completely complementary" to Horace Mann.

As a part of the deal, Madison National and its employees, including senior executive Bob Stubbe, will join Horace Mann. The company also inked a distribution agreement with National Insurance Services, which is a distribution partner for Madison National.

Horace Mann will continue to selectively consider M&A opportunities to make sure that its capital is being used in "productive ways" to drive business growth, CFO Bret Conklin added. The company has not been particularly acquisitive in the past, making just two other purchases since the start of 2018. Far and away its largest acquisition was the $405 million deal for National Teachers Associates Life Insurance, which closed in July 2019.