Vesta Insurance Group has acquired a controlling interest in American Founders Financial Corporation. The transaction will be immediately accretive to Vesta’s third-quarter earnings per share. According to previously disclosed terms, Vesta has purchased $25 million in subordinated notes, convertible to approximately 71 percent of American Founders’ equity and preferred stock which is entitled to vote approximately 71 percent of the current voting power of American Founders.
American Founders subsidiaries, which now fall under Vesta’s umbrella of holdings, include American Founders Life Insurance Company and Laurel Life Insurance Company. American Founders Financial Corporation, domiciled in Texas and operating out of Phoenix, offers universal and term life insurance, as well as mortgage term insurance and annuities through its subsidiaries, primarily AFLIC. AFLIC is licensed in 40 states and the District of Columbia.
American Founders has approximately $2 billion (face value) of life insurance products in force and approximately $185 million in annuity deposits as of December 31, 1999. In separate transactions, Vesta sold the 3.75 million shares of its common stock recently reacquired from Torchmark Corporation in three privately negotiated transactions each representing less than 10 percent of Vesta’s total outstanding voting power.
None of the three transactions resulted in Vesta’s recognition of any gain or loss, with the total number of issued and outstanding shares remaining constant. The terms of the private placement are not being disclosed. Vesta also announced that, on July 2, it acquired the remaining 1.38 million shares of its stock held by Torchmark Corporation for $6.56 per share.
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