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Old Mutual buys F&G
April 26, 2001: 10:37 a.m. ET

South African financial service firm buys life insurer from St Paul for $635M
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LONDON (CNN) - South African financial services company Old Mutual announced on Thursday it would acquire U.S. life assurance firm F&G Life for $635 million.

Old Mutual is buying Baltimore-based Fidelity and Guaranty Life Insurance Co. from a unit of Minnesota-based St. Paul Cos. The deal is part of London-listed Old Mutual's expansion strategy into the U.S.

The company announced at the same time the launch of Americom, a U.S. fixed annuity and life assurance operation that would sell direct to agents.

"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 per cent of its global income," the company said in a statement.

Old Mutual first bought a U.S. life company last month, acquiring Unified Life for $25 million. Last year, it bought Boston-based United Asset Management for $1.5 billion.

The latest purchase will be paid for with $335 million in cash and $300 million in shares.

Old Mutual said it expects the deal to be earnings enhancing this year and to reap synergies of $5-$10 million by 2002.

F&G Life had $5 billion of assets under management at the end of last year. It made after-tax profits of $58.7 million.

In March, Old Mutual reported a 38 percent increase in 2000 operating profits to £911 million ($1.3 billion).

Old Mutual (OML) shares fell 4.5 percent to 148 pence in London afternoon trade. graphic