By Mike Boyer
The Cincinnati Enquirer

MONTGOMERY - Ohio National Life Insurance Co. Tuesday announced the biggest acquisition in its history, agreeing to buy Binghamton, N.Y.-based Security Mutual Life Insurance Co.

Financial terms weren't disclosed. But Ohio National said the deal, expected to be completed later this year, would lift it into the ranks of the top two dozen life insurance sales companies.

The deal also will give it a presence in New York state - one of three states where it doesn't operate now - plus access to a new marketing channel, work-site insurance.

Security Mutual, founded in 1886, had 2002 revenues of $364 million and 250,000 policyholders. Its 2003 sales won't be released until next week.

Ohio National had 2003 revenues of $3.2 billion, up 38 percent from 2002. It has 271,000 policyholders.

Based on 2003 life insurance sales, the addition of Security Mutual would lift Ohio National from 31st to 22nd or 23rd among the 74 companies reporting sales to the Life Insurance Marketing Research Association, officials said.

"In terms of its scope, complexity and the integration challenges, it's the largest acquisition we've done, '' said David O'Maley, chairman and CEO of Ohio National Financial Services, the insurer's parent company.

In the last five years, Ohio National, which employs 750 in Montgomery, has completed four acquisitions as part of its strategy to double its assets to $20 billion by 2006.

The company expects to reach that goal this year, without Security Mutual, O'Maley said. With Security Mutual, it should hit $30 billion in assets within five years.

The two companies have been working together for two years. Ohio National formed a joint venture with Security Mutual in 2002 to acquire First ING Life Insurance, which was renamed National Security Life and Annuity Co., a New York-based annuity provider.

The acquisition, which still must be approved by Security Mutual policy owners and the New York State Insurance Department, shouldn't have a significant impact on Ohio National's staff here or Security Mutual's 315 employees in Binghamton, a city on New York's southern border with Pennsylvania.

Security Mutual, which is licensed in all 50 states, will retain its separate identity and be operated as a subsidiary. Bruce Boyea, its chairman and CEO, will retain those titles and become vice chairman of Ohio National.

Directors of Security Mutual have agreed to a sponsored demutualization to convert from a mutual to a stock company, Ohio National said. Under the plan, Security Mutual policy owners will receive yet-to-be determined cash payments for their mutual interests.

E-mail mboyer@enquirer.com