Monday September 8 6:38 PM EDT
Company Press Release
NAAC Signs Agreement to Acquire Note Which Holds Control of Conestoga Life Insurance and American Sentinel Insurance
NORTH BETHESDA, Md.--(BUSINESS WIRE)--Sept. 8, 1997--National Affiliated Corp. (NASDAQ BB: NAAC) and The Southern Group have signed an agreement to purchase a promissory note, which is collateralized by 54 percent of the common stock of Conestoga Life, from Summit National Life Insurance Co., which is being liquidated by the Pennsylvania Insurance Commissioner.
The note has been in default for three years. Conestoga controls 100 percent of American Sentinel, a Pennsylvania domiciled property and casualty insurance company. Foreclosure proceedings are scheduled for the middle of October.
Conestoga writes ordinary life, group life, and group health insurance and is licensed in 29 states. When combined with NAAC's existing 17 jurisdictions the resulting group will have 38 state licenses.
Conestoga's gross premiums were $49 million and net premiums were $32 million last year. The addition of these premiums would increase NAAC's gross revenues by 2,500 percent (25 times). Conestoga's total assets are $29 million and would increase NAAC's assets by 400 percent. American Sentinel's premiums were $1 million and its assets totaled $5 million.
NAAC's management expects to consolidate an additional 53 cents per share from this acquisition in the first full year. Conestoga will be added to NAAC's LIFE ONE unit. Edward Birrane, Esq., president of LIFE ONE and former Insurance Commissioner of Maryland, stated, ``The management of both insurance companies have excellent track records. Both companies have been profitable each of the last five years. An opportunity such as this requires a great deal of nurturing and long-standing regulatory relationships. We have been pursuing this opportunity for over six months.''
The Form A requesting approval to acquire control of Conestoga and American Sentinel from the Pennsylvania Insurance Commissioner will be filed next week. Pre-approval to acquire control will be requested prior to the mid-October foreclosure proceedings.
NAAC is committed to the acquisition and consolidation of insurance companies, mainly those with clear potential for a high return on investment from immediate cost reductions and timely marketing of profitable niche products.
Please visit our website at: www.southerngroup.com.
------------------------------------------------------------------------ |
