PennCorp Financial Reaches Agreements for Sale of Operating Companies

Jan 10, 2000, 00:00 ET from PennCorp Financial Group, Inc.

    NEW YORK, Jan. 10 /PRNewswire/ -- PennCorp Financial Group, Inc.
 (NYSE:   PFG) announced today that it has entered into a definitive agreement
 for the sale of Southwestern Life Insurance Company and Security Life & Trust
 Insurance Company to Reassure America Life Insurance Company, an indirect U.S.
 subsidiary of Swiss Reinsurance Company of Zurich, Switzerland, for
 $260 million in cash, subject to certain adjustments.  The sale agreement
 requires that the Company effectuate the sale through a voluntary Chapter 11
 case, subject to bankruptcy court approval.
     The Chapter 11 case will only affect the holding company, PennCorp
 Financial Group, Inc., and certain non-insurance company affiliates.  None of
 the insurance company subsidiaries will be included in the case.
     The Company, through its subsidiary American-Amicable Holdings Corp., has
 also entered into a definitive agreement for the sale of its Waco, Texas-based
 insurance operations to a new acquisition company formed by Thoma Cressey
 Equity Partners for $102 million in cash, subject to certain adjustments.  The
 Waco-based operations include Pioneer Security Life Insurance Company,
 Occidental Life Insurance Company of North Carolina, American-Amicable Life
 Insurance Company of Texas and Pioneer American Insurance Company.
     Both sale agreements permit the Company to consider alternative sale or
 recapitalization proposals.  In the event alternative offers are accepted, a
 transaction termination fee would be paid to Swiss Re and/or Thoma Cressey.
 The closing of each sale transaction is subject to customary conditions
 including regulatory approvals.  In addition, the sale of the Waco-based
 companies is contingent upon the buyer's receipt of financing commitments.
     The gross proceeds from the sale transactions, estimated to total
 approximately $360 million, should provide full payment of PennCorp's
 approximately $165 million of bank debt, approximately $115 million of
 subordinated debt, and other unsecured claims.  It is anticipated that any
 balance would be distributed to the Company's preferred stockholders, and no
 distribution would be made to the Company's common stockholders.
     Keith A. Maib, PennCorp President and Chief Executive Officer, said,
 "PennCorp intends to move forward with the sales of the insurance companies
 expeditiously in order to preserve their value.  The sale transactions are
 targeted to close prior to the end of the first quarter."
     "During 1999, as a key component of its restructuring initiatives,
 PennCorp completed a series of divestitures as part of a program to reduce
 debt, decrease operating costs and seek solutions to strengthen its balance
 sheet," Mr. Maib said.  "After careful evaluation, the board and management
 determined that a sale of the core insurance companies is in the best
 interests of the Company, including the policyholders of its insurance
 subsidiaries.  This course of action will allow us to maximize the value of
 the enterprise and ensure the continuing operations of the core assets, and
 should provide full payment of all of the Company's obligations to its
     Mr. Maib also said, "The Company's senior management team has been
 communicating regularly with insurance regulators, who have assured
 policyholders that each of the insurance companies being sold has adequate
 capitalization and sufficient liquidity to meet their obligations to
 policyholders.  The Company believes it will have adequate financial resources
 to fund operations during the restructuring period, and the Chapter 11
 proceeding will have no material impact on the insurance subsidiaries and
 their policyholders.  We will continue to provide our insurance products and
 serve our policyholders as before."
     Wasserstein Perella & Co., Inc. acted as financial advisor on the
     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 throughout the United
     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
 rates levels and stock market performance, which may affect the ability of
 PennCorp to sell its products, the market value of PennCorp's investments and
 lapse rate 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 that may affect the
 profitability of PennCorp's insurance product; (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 continued ability to address Year 2000
 issues; (10) PennCorp's ability to consummate its contemplated sales of its
 remaining operating subsidiaries; (11) unanticipated litigation, and (12)
 other risk factors and uncertainties cited in PennCorp's periodic filings with
 the Securities and Exchange Commission.  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.