F&G Life Ratings on WatchNeg; Planned Sale to Old Mutual

Apr 27, 2001, 01:00 ET from Standard & Poor's

    NEW YORK, April 27 /PRNewswire/ -- Standard & Poor's today placed its
 double-'A' financial strength ratings on Fidelity & Guaranty Life Insurance
 Co. and Thomas Jefferson Life Insurance Co. (collectively F&G Life) on
 CreditWatch with negative implications.
     At the same time, Standard & Poor's affirmed all outstanding ratings on
 St. Paul Cos. Inc. (St. Paul), the members of the St. Paul Fire & Marine
 Insurance Co. Intercompany Pool, and related entities. The outlook is stable.
     The rating actions follow the announcement by St. Paul Fire & Marine
 Insurance Co. (St. Paul Fire & Marine) that it has entered into an agreement
 with Old Mutual plc (Old Mutual) to sell Fidelity & Guaranty Life Insurance
 Co. and Thomas Jefferson Life Insurance Co., subsidiaries of St. Paul, for
 $635 million in cash and ordinary shares.
     Old Mutual, an international financial services company based in London,
 operates the largest life assurance business in South Africa. The proposed
 acquisition of F&G Life in conjunction with Old Mutual's launch of Americom, a
 start-up fixed annuity and life insurance distributor, will provide Old Mutual
 a platform for growth in the U.S. retirement savings market.
     The CreditWatch action reflects Standard & Poor's view that F&G Life's
 prospective rating is likely to be in the low single-'A' range, given F&G
 Life's stand-alone financial strength and the single-'A'-minus issuer credit
 rating on the Republic of South Africa.
     F&G Life's stand-alone rating reflects a good business profile, strong
 and improving operating performance, good capitalization, and a high-quality
 investment portfolio. F&G Life's existing policyholders continue to benefit
 from the explicit guarantee provided by St. Paul Fire & Marine. Standard &
 Poor's will meet with F&G Life and Old Mutual management to assess F&G Life's
 stand-alone rating, the status of St. Paul's explicit guarantee, and the
 prospective benefit from association with Old Mutual.
     The ratings affirmations on St. Paul and related entities reflect the
 view that the transaction is likely to have no material impact on the
 financial strength of the group.  St. Paul Fire & Marine has explicitly
 guaranteed to provide a finite amount of capital support to F&G Life.
 Although this agreement poses a potential liability for St. Paul, it does not
 affect the rating on the company, Standard & Poor's said. -- CreditWire
 
 

SOURCE Standard & Poor's
    NEW YORK, April 27 /PRNewswire/ -- Standard & Poor's today placed its
 double-'A' financial strength ratings on Fidelity & Guaranty Life Insurance
 Co. and Thomas Jefferson Life Insurance Co. (collectively F&G Life) on
 CreditWatch with negative implications.
     At the same time, Standard & Poor's affirmed all outstanding ratings on
 St. Paul Cos. Inc. (St. Paul), the members of the St. Paul Fire & Marine
 Insurance Co. Intercompany Pool, and related entities. The outlook is stable.
     The rating actions follow the announcement by St. Paul Fire & Marine
 Insurance Co. (St. Paul Fire & Marine) that it has entered into an agreement
 with Old Mutual plc (Old Mutual) to sell Fidelity & Guaranty Life Insurance
 Co. and Thomas Jefferson Life Insurance Co., subsidiaries of St. Paul, for
 $635 million in cash and ordinary shares.
     Old Mutual, an international financial services company based in London,
 operates the largest life assurance business in South Africa. The proposed
 acquisition of F&G Life in conjunction with Old Mutual's launch of Americom, a
 start-up fixed annuity and life insurance distributor, will provide Old Mutual
 a platform for growth in the U.S. retirement savings market.
     The CreditWatch action reflects Standard & Poor's view that F&G Life's
 prospective rating is likely to be in the low single-'A' range, given F&G
 Life's stand-alone financial strength and the single-'A'-minus issuer credit
 rating on the Republic of South Africa.
     F&G Life's stand-alone rating reflects a good business profile, strong
 and improving operating performance, good capitalization, and a high-quality
 investment portfolio. F&G Life's existing policyholders continue to benefit
 from the explicit guarantee provided by St. Paul Fire & Marine. Standard &
 Poor's will meet with F&G Life and Old Mutual management to assess F&G Life's
 stand-alone rating, the status of St. Paul's explicit guarantee, and the
 prospective benefit from association with Old Mutual.
     The ratings affirmations on St. Paul and related entities reflect the
 view that the transaction is likely to have no material impact on the
 financial strength of the group.  St. Paul Fire & Marine has explicitly
 guaranteed to provide a finite amount of capital support to F&G Life.
 Although this agreement poses a potential liability for St. Paul, it does not
 affect the rating on the company, Standard & Poor's said. -- CreditWire
 
 SOURCE  Standard & Poor's