Old Mutual closes deal for F&G Life

British company makes acquisition for $635 million

September 29, 2001|By Bill Atkinson | Bill Atkinson,SUN STAFF

Old Mutual PLC, a big financial services company in England, said yesterday that it completed the acquisition of Baltimore's Fidelity & Guaranty Life Insurance Co. for $635 million in cash and stock.

The London-based Old Mutual, which bought F&G Life from the St. Paul Cos. of Minnesota, received approval from regulators in Maryland and New York this week, said Guy Barker, chief executive of Old Mutual's U.S. life insurance operations.

"I think it is going to work out for us all around," Barker said. He said F&G Life has a "good working group of people."

F&G Life sells products that include life insurance and annuities. Barker said it will remain based in Baltimore, where it employs about 170 workers at its offices on Fleet Street.

The acquisition gives Old Mutual a "strong presence in the United States life insurance market," Barker said. "It [F&G Life] has an established brand with well-developed sales channels, a diversified product portfolio and knowledge of the vast U.S. market."

Old Mutual agreed in April to buy F&G Life from St. Paul Cos., which has shed operations to transform itself into an insurance company focused on specialty insurance markets.

Under St. Paul, F&G Life grew rapidly, but the money it made in recent years was reinvested in its operations rather than paid to the parent company.

St. Paul acquired F&G Life in April 1998, when it bought its parent, USF&G Corp., for $3.7 billion. When the deal was announced in January 1998, USF&G employed 2,800 workers in Baltimore and 6,100 nationwide.

St. Paul continues to employ about 1,000 workers at its Mount Washington campus.

Old Mutual has been building its U.S. presence through acquisitions. It has $234 billion in assets and about 3.8 million life assurance policyholders, 2.4 million banking customers, 400,000 short-term insurance policyholders and more than 900,000 unit trust accounts worldwide.

F&G Life is smaller, with $7.1 billion in assets, and sales in excess of $1 billion a year.

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