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.