PennCorp Financial Group Announces Agreements to Sell Its Career Sales Division and Professional Insurance Company - Transactions Simplify and Focus Operations, Provide Funds for Debt

Repayment



- PennCorp Further Announces Additional Asset Sales,

Closing of Regional Executive Offices



    NEW YORK, Jan. 4 /PRNewswire/ -- PennCorp Financial Group, Inc.
 (NYSE:   PFG) today announced that it and certain of its subsidiaries have
 entered into a definitive agreement to sell PennCorp's Career Sales Division
 and related assets to Universal American Financial Corp. (Nasdaq:   UHCO).  The
 purchase price is $175 million, consisting of $136 million in cash, subject to
 adjustment, and $39 million initial principal amount of subordinated notes of
 Universal American.  The subordinated notes will bear interest at a rate of 8%
 per annum and will mature 10 years from the date of issuance.  Interest on the
 notes may be paid in cash or, at the option of Universal American, through the
 issuance of additional subordinated notes.  The accreted value of the notes
 will be subject to offset in the event of adverse development (or subject to
 increase in the event of positive development) in the disability income claim
 reserves of Pennsylvania Life Insurance Company, one of the companies included
 in the Career Sales Division, and may be offset for other indemnification
 claims under the purchase and sale agreement.
     In addition, PennCorp announced that its subsidiary, Pacific Life and
 Accident Insurance Company, has entered into a definitive agreement to sell
 its worksite insurance subsidiary Professional Insurance Company to
 GE Capital's GE Financial Assurance Holdings, Inc. ("GEFAH") for $47.5 million
 in cash plus interest through the closing date.  The purchase price is subject
 to an adjustment based on Professional's capital and surplus at the closing
 date.  Closing of the sale of Professional is subject to certain conditions,
 including: receipt of insurance department approvals;  expiration of the
 waiting period under federal antitrust laws; and delivery and review of
 certain underwriting experience reports and of audited financial statements
 for Professional.  PennCorp currently expects that it would realize net cash
 proceeds (after capital and surplus adjustments, settlement of intercompany
 liabilities and payment of transaction expenses) of approximately $40 million.
     PennCorp also announced that it and an affiliate have sold their common
 stock investment in ACO Brokerage Holdings Corp., the parent company of
 Acordia, Inc.  This sale, combined with the receipt of $1.0 million in final
 settlement of the escrow account established in connection with the earlier
 sale by PennCorp of its preferred stock investment in ACO Brokerage Holdings
 for $21.0 million, resulted in approximately $11.9 million of additional cash
 proceeds to PennCorp and its affiliate.
     The Company is currently marketing for potential sale United Life and
 Annuity Insurance Company.  Initial due diligence has occurred and the Company
 is expecting final expressions of interest from a group of potential strategic
 purchasers shortly.  The Company intends to evaluate these bids with a view to
 negotiating a definitive agreement with a purchaser if an acceptable bid is
 received.
     Finally, PennCorp announced that it closed its office in New York City on
 December 31, 1998.  Substantially all of the Bethesda, Md. operations have
 been consolidated into Dallas and the Bethesda office will close upon
 termination of the lease in May, 1999.
     Keith Maib, President and Chief Executive Officer of PennCorp stated,
 "Selling the Career Sales Division and Professional Insurance Company will
 simplify PennCorp's operations and business mix, provide the Company with cash
 to pay down debt and allow the Company to focus its time and resources on its
 core group of companies consolidated in Texas, principally Southwestern Life
 Insurance Company, American-Amicable Life Insurance Company of Texas, and
 Security Life and Trust Insurance Company."
     The net cash proceeds that PennCorp will receive from the Career Sales
 Division transaction will depend upon the capital and surplus levels of the
 divested insurance companies as of the closing date and will be affected by
 the amounts that PennCorp is required to pay to settle intercompany and other
 liabilities, as well as expenses associated with the transaction.  PennCorp
 currently expects that it would realize net cash proceeds of approximately $75
 million.
     Consummation of the sale of the Career Sales Division is subject to
 several conditions, including:  insurance department approval; expiration or
 early termination of the waiting period under federal antitrust laws; approval
 by the stockholders of Universal American of an amendment to its charter;
 satisfactory conclusion of a review by Universal American of the claims
 reserves of Pennsylvania Life; delivery of audited financial statements of the
 Career Sales division; and maintenance by the relevant insurance companies of
 a rating from AM Best and Company of at least B+ (which is the current AM Best
 rating), or assurances satisfactory to Universal American that the rating will
 be at least B+ on or immediately after closing.
     The Career Sales Division consists of Pennsylvania Life Insurance Company,
 Union Bankers Insurance Company, Peninsular Life Insurance Company, PennCorp
 Life Insurance Company, Constitution Life Insurance Company, Marquette
 National Life Insurance Company, PennCorp Financial, Inc. and substantially
 all of the assets of PennCorp Financial Services, Inc.
     The parties expect both the Career Sales Division and the Professional
 transactions to close prior to the end of the second quarter of 1999.
     PennCorp Financial Group, Inc. is an insurance holding company.  Through
 its subsidiaries, the Company underwrites and markets life insurance and
 accident and sickness insurance to the middle market through the United States
 and Canada.
     Cautionary Statement for purposes of the Safe Harbor Provisions of the
 Private Securities Litigation Reform Act of 1995:  All statements in this
 press release including words such as "anticipate," "believe," "plan,"
 "estimate," "expect," "intend" and other similar expressions constitute
 forward-looking statements under the Private Securities Litigation Reform Act
 of 1995.  These forward-looking statements are subject to known and unknown
 risks, uncertainties and other factors contemplated by the forward-looking
 statements.  Such factors include, among other things:  (1) general economic
 conditions and other factors, including prevailing interest rate levels and
 stock market performance, which may affect the ability of PennCorp to sell its
 products, the market value of PennCorp's investments and the lapse rate and
 profitability of policies; (2) PennCorp's ability to achieve anticipated
 levels of operational efficiencies and cost-saving initiatives; (3) customer
 response to new products, distribution channels and marketing initiatives;
 (4) mortality, morbidity and other factors which may affect the profitability
 of PennCorp's insurance products; (5) changes in the Federal income tax laws
 and regulations which may affect the relative tax advantages of some of
 PennCorp's products; (6) increasing competition in the sale of insurance and
 annuities; (7) regulatory changes or actions, including those relating to
 regulation of insurance products and of insurance companies; (8) ratings
 assigned to PennCorp's insurance subsidiaries by independent rating
 organizations such as A. M. Best Company ("A.M. Best"), which the Company
 believes are particularly important to the sale of annuity and other
 accumulation products; (9) PennCorp's ability to successfully complete its
 Year 2000 remediation efforts; (10) the ultimate realizable value of
 Businesses Held for Sale; and (11) unanticipated litigation.  There can be no
 assurance that other factors not currently anticipated by management will not
 also materially and adversely affect the Company.
 
 

SOURCE PennCorp Financial Group, Inc.

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