Guardian Life Insurance Co. of America and Berkshire Life Insurance Co. will merge in an effort to expand their respective product offerings.

The merger, which is subject to approval from policyholders and Massachusetts and New York state regulators, is expected to be completed in mid-2001. Nearly 140,000 Berkshire policyholders and 7 million Guardian policyholders will vote on the proposal. If it's thumbs-up, Berkshire will retain its name, operating as a 100 percent owned subsidiary of The Guardian. Berkshire policyholders will become Guardian policyholders.

The Guardian is the fifth-largest mutual life insurer in the nation, and Berkshire is ranked 30th. No cash will be exchanged in the deal. Once the merger is complete, the company plans to remain a mutual.

No job cuts, but a refocus for Berkshire

Berkshire CEO James Zilinski expects no job cuts at the company's headquarters in Pittsfield, Mass. In fact, Berkshire expects its employee base at its headquarters to grow from 300 to 500 within the next five years. Berkshire's 140 agents will become Guardian agents.

Berkshire plans to shift its focus from individual life insurance and annuities to disability insurance. The shift will require "major retraining" for some Berkshire employees at its headquarters. Zilinski is not sure of the number of employees who will need retraining, but the insurer will begin examining the shift in two to three months. "Nothing is happening quickly," Zilinski says of the merger. "This merger is not about job reduction."

It is about growth, Zilinski says. Berkshire will "dramatically expand" its disability insurance operations. Joseph Sargent, CEO of The Guardian, sees "room for substantial growth" in this market because baby boomers are approaching their prime disability age.

Berkshire also will consider expanding its sales into long term care, corporate-owned life, and bank-owned life insurance. Corporate-owned life insurance and bank-owned life insurance are policies similar to key person insurance — coverage corporations buy in case their executives die. (For more, click to Key person insurance can help companies mourning an owner or exec.)

The Guardian has been busy on the merger and acquisition front this year. In January, it acquired two companies: Fiduciary Insurance Co. of America, which sells disability insurance in New York, and First Choice Dental Network, a preferred provider organization that operates in Washington.