Old Mutual plc Proposes Acquisition of F&G Life for US$635 Million (441 Million Pounds)

Launch of New US Life Assurance Business - Americom



Apr 26, 2001, 01:00 ET from Fidelity and Guaranty Life Insurance Company

    LONDON, April 26 /PRNewswire/ -- Old Mutual plc ("Old Mutual"), the
 London-listed financial services company (London: OML), has entered into an
 agreement with St. Paul Fire and Marine ("St. Paul"), a subsidiary of The St.
 Paul Companies Inc. ("The St. Paul") (NYSE:   SPC) to acquire The St. Paul's
 subsidiary Fidelity and Guaranty Life Insurance Company ("F&G Life"), a
 Baltimore-based fixed annuity and life assurance specialist, for $635 million
 (441 million pounds) in cash and ordinary shares.  The acquisition is
 conditional only upon the receipt of regulatory approvals.
     In addition, Old Mutual is launching Americom -- a complementary US fixed
 annuity and life assurance operation with a powerful and distinctive
 distribution system.
     This twin entry into the world's largest life assurance and retirement
 savings market further broadens Old Mutual's international business, which
 will now provide over 27% of its global income.
     Old Mutual will utilize some of the product development expertise in F&G
 Life in the development of its product range in South Africa and, at the same
 time, will draw on certain of its skills in the development of certain
 products in the US.
 
     Overview of F&G Life
     F&G Life is a fast growing provider of fixed interest based retirement and
 life assurance products.  F&G Life distributes its products primarily through
 independent agent networks known as Master General Agents ("MGAs").  F&G Life
 had $5 billion of assets under management at December 31, 2000.  In the year
 ended December 31, 2000, F&G Life generated an after-tax operating profit of
 $58.7 million on a US GAAP basis on statutory premiums of $1,160 million.  At
 December 31, 2000, the net asset value of F&G Life stood at $571 million.
 
     Terms of the Transaction
     Old Mutual proposes to acquire F&G Life's equity, as well as the right to
 $50 million of surplus notes (subordinated debt), for a purchase price of
 $635 million, representing a multiple of 10.5x adjusted after-tax operating
 earnings and 1.0x unlevered US GAAP book value.  The transaction is expected
 to be immediately earnings enhancing in the current year.  Synergies are
 expected to be between $5-10 million, achievable by 2002.
     Old Mutual will effect the proposed acquisition of F&G Life through a
 payment of $335 million (233 million pounds) in cash and $300 million
 (208 million pounds) in ordinary shares to The St. Paul.  The cash portion of
 the proposed acquisition will be financed from internal resources, including
 committed credit lines.
     The price paid is subject to adjustment in certain circumstances,
 including the issue of additional Old Mutual shares as consideration or the
 payment of up to an additional $40 million in cash if, after one year, the
 value of the shares issued to St. Paul falls below $300 million.  Equally, Old
 Mutual has the right to call any gain in value of the shares in excess of
 $30 million after one year.  St. Paul has agreed not to sell the shares
 received as consideration for a period of one year following completion.
     Upon completion of the acquisition Old Mutual expects its gearing ratio
 (total debt/total debt + shareholders' equity) to be approximately 26% on a
 pro forma basis.  Old Mutual will provide an additional $85 million of capital
 to strengthen the capital bases of F&G Life and Americom.
 
     Launch of Americom
     Americom is a Kansas City-based fixed annuity and life assurance provider,
 which will build on the platform gained through the acquisition of Unified
 Life, announced on March 2, 2001.  Americom will provide significant
 additional distribution power to Old Mutual's US life business by selling
 directly to independent agents.  Americom will commence its sales operations
 on 1 May 2001, with licences in 44 states.
 
     Management
     The management of the two businesses will be led by Guy Barker, Chief
 Executive of Old Mutual's US life operations reporting to Jim Sutcliffe. Guy
 was most recently Chief Executive of NatWest Life and was previously Chief
 Actuary of Jackson National. Harry Stout will continue to act as President of
 F&G Life, with his current management team reporting to him as at present.
 Americom will be headed by Joe Sulzinger, who brings 10 years of experience in
 the direct distribution of life insurance products in the US market.
     The boards of directors of both Old Mutual and The St. Paul have approved
 the transaction. The acquisition is subject to regulatory approvals, which are
 expected to take several months, but should be completed by the end of the
 third quarter.
     Commenting on the transaction, Jim Sutcliffe, Chief Executive, Life of Old
 Mutual said:
     "These two announcements herald important milestones in our international
 strategy. Firstly the acquisition has been achieved on attractive terms, at a
 time when fixed annuities will benefit from added interest from US consumers.
 Secondly Americom complements F&G Life by adding a new distribution channel .
 I am delighted with the exceptionally strong management team we now have in
 place in the US to drive growth in the world's largest market for life
 insurance and retirement services."
 
     Harry Stout, President of F&G Life, added:
     "By agreeing to acquire F&G Life, Old Mutual has gained a company that
 provides an immediate and proven product portfolio and distribution system for
 the growing US market. This will translate into substantial added benefit and
 value for customers, agents, employees and stockholders in the years ahead. "
 
 
     NOTES TO EDITORS
     Old Mutual plc (www.oldmutual.com) is an international financial services
 company based in London, with expanding operations in life assurance, asset
 management, banking and general insurance. Old Mutual is listed on the London
 Stock Exchange, as well as on the Johannesburg, Namibian, Malawi and Zimbabwe
 stock exchanges.
     The company operates the largest life assurance business in Southern
 Africa, through which it provides life, disability and health insurance,
 retirement savings and investment products to individuals and groups. Plans to
 start life assurance operations in India, the UK and the USA have recently
 been announced.
     During 2000, Old Mutual acquired Gerrard Group and United Asset Management
 Corporation, bringing total group assets under management to about #170
 billion at 31 December 2000. Old Mutual owns 53.4% of Nedcor, a leading South
 African bank, and 51% of the South African general insurance company, Mutual &
 Federal.
     Fidelity and Guaranty Life Insurance Company (www.fglife.com) is a
 specialist provider of fixed deferred and immediate annuities, term and
 universal life insurance, structured settlement and tax-sheltered annuities.
 The company's products are sold throughout the United States through master
 general agents, independent agents, speciality brokerage firms, and in
 selected institutional markets.  Structured settlement annuities are sold
 predominantly through property-casualty companies for use in settlement of
 certain of their insurance claims. As at 31 December 2000 F&G Life had total
 assets of $6.3 billion (4.2 billion pounds).
     F&G Life employs about 182 employees, most of them located in Baltimore,
 which will remain its corporate headquarters after the acquisition is
 completed.
     The St. Paul Companies Inc. (www.stpaul.com), based at Saint Paul,
 Minnesota, is a group of companies providing property-liability insurance and
 reinsurance products and services worldwide. The St. Paul reported 2000
 revenues of more than $8.6 billion (6.0 billion pounds) and total assets of
 $41 billion (28.9 billion pounds).
 
     ENQUIRIES:
 
     Old Mutual plc, London
     Jim Sutcliffe, Chief Executive, Life           Tel: +44 (0) 20 7569 0100
     James Poole, Director, Investor Relations      Tel: +44 (0) 20 7569 0121
 
     Old Mutual Life, US
     Jim Morrison, Chief Marketing Officer          Tel: +1 (0) 913 402 2336
 
     Old Mutual, South Africa
     Julian Roberts, Group Finance Director         Tel: +27 (0) 11 447 3030
 
     College Hill, London
     Tony Friend                                    Tel: +44 (0) 20 7457 2020
 
     College Hill, South Africa
     Gareth David                                   Tel: +27 (0) 11 447 3030
 
     Fidelity and Guaranty Life Insurance Company   Tel: US (410) 895-0050
     Mark Stone, VP, Corporate Communications
 
     There will be a presentation to analysts today at College Hill, 4th Floor,
 78 Cannon Street, London EC4N 6HH and Nedcor Ltd, 105 West Street, Sandton at
 2.30pm UK time/3.30pm SA time. A telephone conference facility will be
 available for analysts who are unable to attend in person. Anyone wishing to
 use this facility is invited to contact College Hill for details.
     Dresdner Kleinwort Wasserstein and Merrill Lynch & Co. acted as financial
 advisors to Old Mutual for the purposes of the acquisition of F&G Life.
 Dresdner Kleinwort Wasserstein is regulated by The Securities and Futures
 Authority Limited, and will not regard any other person as its customer in
 relation to this transaction.  In this notice, "Dresdner Kleinwort
 Wasserstein" means Kleinwort Benson Limited.  Weil, Gotshal & Manges LLP acted
 as legal counsel to Old Mutual.  Goldman Sachs & Co. acted as financial
 advisors and Sullivan & Cromwell acted as legal counsel to The St. Paul.
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X42345323
 
 

SOURCE Fidelity and Guaranty Life Insurance Company
    LONDON, April 26 /PRNewswire/ -- Old Mutual plc ("Old Mutual"), the
 London-listed financial services company (London: OML), has entered into an
 agreement with St. Paul Fire and Marine ("St. Paul"), a subsidiary of The St.
 Paul Companies Inc. ("The St. Paul") (NYSE:   SPC) to acquire The St. Paul's
 subsidiary Fidelity and Guaranty Life Insurance Company ("F&G Life"), a
 Baltimore-based fixed annuity and life assurance specialist, for $635 million
 (441 million pounds) in cash and ordinary shares.  The acquisition is
 conditional only upon the receipt of regulatory approvals.
     In addition, Old Mutual is launching Americom -- a complementary US fixed
 annuity and life assurance operation with a powerful and distinctive
 distribution system.
     This twin entry into the world's largest life assurance and retirement
 savings market further broadens Old Mutual's international business, which
 will now provide over 27% of its global income.
     Old Mutual will utilize some of the product development expertise in F&G
 Life in the development of its product range in South Africa and, at the same
 time, will draw on certain of its skills in the development of certain
 products in the US.
 
     Overview of F&G Life
     F&G Life is a fast growing provider of fixed interest based retirement and
 life assurance products.  F&G Life distributes its products primarily through
 independent agent networks known as Master General Agents ("MGAs").  F&G Life
 had $5 billion of assets under management at December 31, 2000.  In the year
 ended December 31, 2000, F&G Life generated an after-tax operating profit of
 $58.7 million on a US GAAP basis on statutory premiums of $1,160 million.  At
 December 31, 2000, the net asset value of F&G Life stood at $571 million.
 
     Terms of the Transaction
     Old Mutual proposes to acquire F&G Life's equity, as well as the right to
 $50 million of surplus notes (subordinated debt), for a purchase price of
 $635 million, representing a multiple of 10.5x adjusted after-tax operating
 earnings and 1.0x unlevered US GAAP book value.  The transaction is expected
 to be immediately earnings enhancing in the current year.  Synergies are
 expected to be between $5-10 million, achievable by 2002.
     Old Mutual will effect the proposed acquisition of F&G Life through a
 payment of $335 million (233 million pounds) in cash and $300 million
 (208 million pounds) in ordinary shares to The St. Paul.  The cash portion of
 the proposed acquisition will be financed from internal resources, including
 committed credit lines.
     The price paid is subject to adjustment in certain circumstances,
 including the issue of additional Old Mutual shares as consideration or the
 payment of up to an additional $40 million in cash if, after one year, the
 value of the shares issued to St. Paul falls below $300 million.  Equally, Old
 Mutual has the right to call any gain in value of the shares in excess of
 $30 million after one year.  St. Paul has agreed not to sell the shares
 received as consideration for a period of one year following completion.
     Upon completion of the acquisition Old Mutual expects its gearing ratio
 (total debt/total debt + shareholders' equity) to be approximately 26% on a
 pro forma basis.  Old Mutual will provide an additional $85 million of capital
 to strengthen the capital bases of F&G Life and Americom.
 
     Launch of Americom
     Americom is a Kansas City-based fixed annuity and life assurance provider,
 which will build on the platform gained through the acquisition of Unified
 Life, announced on March 2, 2001.  Americom will provide significant
 additional distribution power to Old Mutual's US life business by selling
 directly to independent agents.  Americom will commence its sales operations
 on 1 May 2001, with licences in 44 states.
 
     Management
     The management of the two businesses will be led by Guy Barker, Chief
 Executive of Old Mutual's US life operations reporting to Jim Sutcliffe. Guy
 was most recently Chief Executive of NatWest Life and was previously Chief
 Actuary of Jackson National. Harry Stout will continue to act as President of
 F&G Life, with his current management team reporting to him as at present.
 Americom will be headed by Joe Sulzinger, who brings 10 years of experience in
 the direct distribution of life insurance products in the US market.
     The boards of directors of both Old Mutual and The St. Paul have approved
 the transaction. The acquisition is subject to regulatory approvals, which are
 expected to take several months, but should be completed by the end of the
 third quarter.
     Commenting on the transaction, Jim Sutcliffe, Chief Executive, Life of Old
 Mutual said:
     "These two announcements herald important milestones in our international
 strategy. Firstly the acquisition has been achieved on attractive terms, at a
 time when fixed annuities will benefit from added interest from US consumers.
 Secondly Americom complements F&G Life by adding a new distribution channel .
 I am delighted with the exceptionally strong management team we now have in
 place in the US to drive growth in the world's largest market for life
 insurance and retirement services."
 
     Harry Stout, President of F&G Life, added:
     "By agreeing to acquire F&G Life, Old Mutual has gained a company that
 provides an immediate and proven product portfolio and distribution system for
 the growing US market. This will translate into substantial added benefit and
 value for customers, agents, employees and stockholders in the years ahead. "
 
 
     NOTES TO EDITORS
     Old Mutual plc (www.oldmutual.com) is an international financial services
 company based in London, with expanding operations in life assurance, asset
 management, banking and general insurance. Old Mutual is listed on the London
 Stock Exchange, as well as on the Johannesburg, Namibian, Malawi and Zimbabwe
 stock exchanges.
     The company operates the largest life assurance business in Southern
 Africa, through which it provides life, disability and health insurance,
 retirement savings and investment products to individuals and groups. Plans to
 start life assurance operations in India, the UK and the USA have recently
 been announced.
     During 2000, Old Mutual acquired Gerrard Group and United Asset Management
 Corporation, bringing total group assets under management to about #170
 billion at 31 December 2000. Old Mutual owns 53.4% of Nedcor, a leading South
 African bank, and 51% of the South African general insurance company, Mutual &
 Federal.
     Fidelity and Guaranty Life Insurance Company (www.fglife.com) is a
 specialist provider of fixed deferred and immediate annuities, term and
 universal life insurance, structured settlement and tax-sheltered annuities.
 The company's products are sold throughout the United States through master
 general agents, independent agents, speciality brokerage firms, and in
 selected institutional markets.  Structured settlement annuities are sold
 predominantly through property-casualty companies for use in settlement of
 certain of their insurance claims. As at 31 December 2000 F&G Life had total
 assets of $6.3 billion (4.2 billion pounds).
     F&G Life employs about 182 employees, most of them located in Baltimore,
 which will remain its corporate headquarters after the acquisition is
 completed.
     The St. Paul Companies Inc. (www.stpaul.com), based at Saint Paul,
 Minnesota, is a group of companies providing property-liability insurance and
 reinsurance products and services worldwide. The St. Paul reported 2000
 revenues of more than $8.6 billion (6.0 billion pounds) and total assets of
 $41 billion (28.9 billion pounds).
 
     ENQUIRIES:
 
     Old Mutual plc, London
     Jim Sutcliffe, Chief Executive, Life           Tel: +44 (0) 20 7569 0100
     James Poole, Director, Investor Relations      Tel: +44 (0) 20 7569 0121
 
     Old Mutual Life, US
     Jim Morrison, Chief Marketing Officer          Tel: +1 (0) 913 402 2336
 
     Old Mutual, South Africa
     Julian Roberts, Group Finance Director         Tel: +27 (0) 11 447 3030
 
     College Hill, London
     Tony Friend                                    Tel: +44 (0) 20 7457 2020
 
     College Hill, South Africa
     Gareth David                                   Tel: +27 (0) 11 447 3030
 
     Fidelity and Guaranty Life Insurance Company   Tel: US (410) 895-0050
     Mark Stone, VP, Corporate Communications
 
     There will be a presentation to analysts today at College Hill, 4th Floor,
 78 Cannon Street, London EC4N 6HH and Nedcor Ltd, 105 West Street, Sandton at
 2.30pm UK time/3.30pm SA time. A telephone conference facility will be
 available for analysts who are unable to attend in person. Anyone wishing to
 use this facility is invited to contact College Hill for details.
     Dresdner Kleinwort Wasserstein and Merrill Lynch & Co. acted as financial
 advisors to Old Mutual for the purposes of the acquisition of F&G Life.
 Dresdner Kleinwort Wasserstein is regulated by The Securities and Futures
 Authority Limited, and will not regard any other person as its customer in
 relation to this transaction.  In this notice, "Dresdner Kleinwort
 Wasserstein" means Kleinwort Benson Limited.  Weil, Gotshal & Manges LLP acted
 as legal counsel to Old Mutual.  Goldman Sachs & Co. acted as financial
 advisors and Sullivan & Cromwell acted as legal counsel to The St. Paul.
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X42345323
 
 SOURCE  Fidelity and Guaranty Life Insurance Company