| In an effort to raise more than $260 million to
pay off its creditors, PennCorp Financial Group Inc. is selling two of its life insurance companies to Reassure America Life Insurance Co., a subsidiary of Swiss Reinsurance Co.
| Recent developments for PennCorp |
Trading of PennCorp ceased on the Big Board on Jan. 7.
Standard
& Poor's, an insurance company rating service, downgraded PennCorp
on Feb. 8, from "CC" to "D," reflecting PennCorp's "weak financial
structure." PennCorp unloaded
six companies: American-Amicable Life Insurance Co. of Texas,
Occidental Life Insurance Co. of North Carolina, Pioneer American
Insurance Co., Pioneer Security Life Insurance Co., Security Life &
Trust Insurance Co., and Southwestern Life Insurance Co. for more than
$357 million in cash. |
Reassure
America will pick up Security Life & Trust Insurance Co. and
Southwestern Life Insurance Co. for $260 million in cash. The sale is
subject to bankruptcy court approval and is expected to be finalized at
the end of the first quarter of 2000.
PennCorp, a
Dallas-based insurance holding company, voluntarily filed for
bankruptcy on Jan. 10, 2000. It then completed the sale four of its
other insurance companies — American-Amicable Life Insurance Co. of
Texas, Occidental Life Insurance Co. of North Carolina, Pioneer
American Insurance Co., and Pioneer Security Life Insurance Co. — to
Thoma Cressey Equity Partners on Feb. 4, 2000, for $97 million in cash.
PennCorp reports it owes approximately $115 million to
various creditors, plus another $65 million to banks. The company
anticipates any surplus after satisfying creditors will be distributed
among its preferred stockholders. Common stockholders will get nothing
from the sales. President and CEO of PennCorp, Keith Maib, says that the
company's bankruptcy will have "no material impact on the day-to-day
operations of the insurance [companies], and no material impact on
their policyholders." Maib says that the six insurance companies will
continue to service policyholder claims and sell life insurance products throughout the bankruptcy proceedings.
Jim
Davis, a spokesperson for the Texas Department of Insurance, confirms
that policyholders with the six insurance companies won't feel any
effects of PennCorp's bankruptcy.
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