American Financial Group, Inc. Announces Completion of the Sale of its Long-term Care Business
25 12월 2015 - 5:09AM
Business Wire
American Financial Group, Inc. (NYSE: AFG) announced today the
completion of the sale of United Teacher Associates Insurance
Company and Continental General Insurance Company, the legal
entities containing substantially all of its run-off long-term care
insurance business, to HC2 Holdings, Inc. (“HC2”) (NYSE MKT: HCHC)
for approximately $15 million of proceeds. In addition, AFG may
also receive up to $13 million of additional proceeds from HC2 in
the future based on the release of certain statutory reserves of
the legal entities sold by AFG. In connection with obtaining
regulatory approval for the transaction, AFG agreed to provide up
to an aggregate of $35 million of capital support for the insurance
companies, on an as-needed basis to maintain specified surplus
levels, subject to immediate reimbursement by HC2; this agreement
expires five years after closing. In exchange for this agreement,
AFG received warrants to purchase two million shares of HC2 common
stock.
In the first quarter of 2015, AFG recorded an after-tax non-core
loss of $105 million in connection with this transaction; an
additional after-tax non-core loss of up to $10 million may be
recorded after closing, reflecting updated valuations of expected
proceeds to be received and net assets disposed.
Due to a significant tax benefit from the sale, AFG expects to
receive total after-tax proceeds of $110 to $115 million from the
transaction (including the tax benefit but before any potential
future proceeds).
With the completion of this sale, AFG has divested substantially
all of its long-term care business (96% as measured by net
statutory reserves as of November 30, 2015), and will retain only a
small block of 1,700 polices totaling approximately $33 million of
reserves.
Philip Falcone, HC2’s Chairman, President and Chief Executive
Officer said: “We are thrilled to close this transaction with
American Financial Group and to begin building our insurance
platform. We believe this acquisition provides a strong base on
which to grow our insurance vertical and also offers further
diversification for HC2.”
Craig Lindner, AFG’s Co-Chief Executive Officer stated: “The
disposition of substantially all of our long-term care business
allows us to provide continued focus on our annuity business, where
we are a leading provider of fixed and fixed-indexed annuities in
the financial institutions and retail markets. Furthermore,
completion of the sale is expected to create between $110 and $115
million of excess capital for AFG by mid-2016 (due to the timing of
tax benefits to be received), in addition to the $700 million of
excess capital reported at September 30, 2015. We are confident
that the sale will enable us to redeploy capital, increase earnings
and returns, and create long-term value for our shareholders.”
About American Financial Group,
Inc.
American Financial Group, Inc. (“AFG”) is an insurance holding
company, based in Cincinnati, Ohio with assets of approximately $50
billion. Through the operations of Great American Insurance Group,
AFG is engaged primarily in property and casualty insurance,
focusing on specialized commercial products for businesses, and in
the sale of fixed and fixed-indexed annuities in the retail,
financial institutions and education markets. Great American
Insurance Group’s roots go back to 1872 with the founding of its
flagship company, Great American Insurance Company.
Forward Looking
Statements
This press release contains certain statements that may be
deemed to be “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements in this press
release not dealing with historical results are forward-looking and
are based on estimates, assumptions and projections. Examples of
such forward-looking statements include statements relating to:
AFG’s expectations concerning market and other conditions and their
effect on future premiums, revenues, earnings and investment
activities; recoverability of asset values; expected losses and the
adequacy of reserves for long-term care, asbestos, environmental
pollution and mass tort claims; rate changes; and improved loss
experience.
Actual results and/or financial condition could differ
materially from those contained in or implied by such
forward-looking statements for a variety of reasons including but
not limited to: changes in financial, political and economic
conditions, including changes in interest and inflation rates,
currency fluctuations and extended economic recessions or
expansions in the U.S. and/or abroad; performance of securities
markets; AFG’s ability to estimate accurately the likelihood,
magnitude and timing of any losses in connection with investments
in the non-agency residential mortgage market; new legislation or
declines in credit quality or credit ratings that could have a
material impact on the valuation of securities in AFG’s investment
portfolio; the availability of capital; regulatory actions
(including changes in statutory accounting rules); changes in the
legal environment affecting AFG or its customers; tax law and
accounting changes; levels of natural catastrophes and severe
weather, terrorist activities (including any nuclear, biological,
chemical or radiological events), incidents of war or losses
resulting from civil unrest and other major losses; development of
insurance loss reserves and establishment of other reserves,
particularly with respect to amounts associated with asbestos and
environmental claims and AFG’s run-off long-term care business;
availability of reinsurance and ability of reinsurers to pay their
obligations; trends in persistency, mortality and morbidity;
competitive pressures, including those in the annuity distribution
channels, the ability to obtain adequate rates and policy terms;
changes in AFG’s credit ratings or the financial strength ratings
assigned by major ratings agencies to AFG’s operating subsidiaries;
and other factors identified in AFG’s filings with the Securities
and Exchange Commission.
The forward-looking statements herein are made only as of the
date of this press release. AFG assumes no obligation to publicly
update any forward-looking statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20151224005239/en/
American Financial Group, Inc.Diane P. WeidnerAsst. Vice
President - Investor Relations513-369-5713
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