Acacia Mutual Life Insurance Co. announced yesterday it plans to buy the Calvert Group, a Washington-based mutual fund company, for $12.5 million.
The privately owned Calvert, which operates several money market funds, will continue under its present management, headed by Chairman D. Wayne Silby and President John G. Guffey Jr.
"It's a perfect match for both companies," said Duane B. Adams, Acacia's chairman. The Washington insurer gains the ability to offer a bigger variety of products and services to its customers plus Calvert's sophisticated computer software systems, while the investment company will benefit from Acacia's sizable sales force and the capital it will provide, he explained.
Acacia plans to pay $9 million in cash with the remaining $3.5 million payable over two years.
In recent years Acacia has established several subsidiaries to diversify its operations. Calvert is its first outside acquisition, "but it won't be the last," said Adams.
The acquisition, believed to be the first local combination of an insurance company and an investment company, demonstrates the blurring of traditional distinctions between financial services. Insurance companies are racing commercial banks into other investment areas.
The giant Prudential Insurance Co. began the trend by merging with Bache Securities about two years ago. Geico Corp. has started mutual funds and also owns an industrial bank. The Reagan administration has proposed allowing bank holding companies to underwrite insurance.
Acacia has $884.5 million in assets and 1,000 employes, including 500 agents in 50 cities around the country. Calvert, a closely held corporation founded in 1976, manages $1.3 billion in funds. Adams said Calvert, whose assets, like those of all money funds, have declined since last year, was "not as profitable as we would like."