EXHIBIT 99.1
(BW) (Financial Industries Corporation) (FNIN) Financial Industries
Corporation Acquires Three Companies
Creates Niche in the Secondary Education Market
AUSTIN, Texas - (BUSINESS WIRE) - June 5, 2003 - Financial Industries
Corporation (FIC) announced today that it has acquired three companies in the
secondary education financial services market, and is now positioned to become
an industry leader in that market. The acquisitions were executed as a component
of the strategic business plan outlined last spring by FIC's new management
team, and are part of its vision to implement a comprehensive marketing plan for
the company.
The acquired companies will operate through a newly created, wholly owned
subsidiary called FIC Financial Services, Inc., and include:
o TotalCompensation Group Consulting, Inc., a consulting firm and
registered investment advisor;
o Paragon, a group of three companies providing employee benefits
products and services;
o JNT Group, Inc., an independent fee-based third party administrator.
The total consideration for these acquisition transactions is $6.9 million
payable 56% in cash and 44% in FIC stock. The FIC stock is subject to forfeiture
in the event that certain business targets are not met. The company received a
favorable fairness opinion on these transactions from its financial advisor,
Advest, Inc., and the transactions were approved last week by the company's
Board of Directors.
"Each of these three companies brings to FIC knowledgeable people with developed
relationships, and a proven track record providing benefit plan services and
products for the educator and school administrator marketplace," said Eugene
Payne, CEO, President and Chairman of FIC. "When they come together as FIC
Financial Services, FIC expects to be transformed from a company offering a
limited number of life insurance and fixed annuity products to a financial
services organization offering a wide range of products."
Payne also announced that William P. Tedrow, an insurance industry veteran with
over 30 years experience, has been named President of FIC Financial Services,
Inc. The founders of each of the three acquired companies have entered into
employment agreements with the newly created subsidiary of FIC, which will
employ approximately 32 people in addition to its managed agency force. It will
be located with parent company FIC in Austin, Texas.
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"The entire new management team at FIC is excited by the business prospects
these three acquisitions bring to our company," said Payne. "FIC is now
positioned to become a premier player in an important market niche, while the
growth from the new subsidiary will result in a significant improvement in FIC's
overall cost structure."
The complete acquisition package was facilitated for FIC by representatives of
American Physicians Service Group, Inc. (APS) and Equita Financial and Insurance
Services, a new marketing partner for FIC. APS and Equita will receive options
to purchase 492,000 shares of FIC stock at $16.42 per share (120% of the average
closing price for the 15 trading days ended June 3, 2003) exercisable only if
the newly formed subsidiary, FIC Financial Services, Inc., produces over $200
million in sales between July 1, 2003, and December 31, 2005. No options can be
exercised if the new sales target is not reached.
Equita was also granted an option to purchase 158,000 shares of FIC stock at
$16.42 per share, fully exercisable only if its marketing activities generate
over $360 million in sales. Last year FIC produced a total of $22 million in
annuity and life insurance sales; 74 percent in annuities. A designated
representative of each APS and Equita will fill two vacancies on FIC's Board of
Directors created by the resignations of Roy and Scott Mitte.
In a separate transaction, APS and an affiliate of Equita also announced today
that they had purchased approximately 312, 484 shares and 204,918 shares,
respectively, of FIC stock. A majority of this stock was purchased from the
Mitte Foundation, and represents a reduction in shares for which FIC was to
locate a purchaser in connection with the previously announced settlement
between FIC, Mitte family members, and the Mitte Foundation. An additional
27,395 shares were purchased by APS from FIC, and represent some of the shares
FIC purchased from Roy Mitte in connection with the same settlement agreement.
About Total Compensation Group Consulting, Inc.
TCG Consulting focuses on large employer group consulting and investment
advisory services to educators' groups. The company provides retirement plan
design and management services on a for-fee basis.
About Paragon
Paragon generates its revenue principally through the direct sales of
supplemental insurance products, life insurance and annuity products. These
products are sold to educators, city and state employees. Currently, Paragon
employs 20 managed agents and has more than 450 broker relationships selling a
broad range of products from a variety of insurers.
About JNT Group, Inc.
JNT Group is a fee-only third-party administrative services company. JNT's
revenues are driven by administration fees paid by employers who receive JNT
services. JNT currently administers plans for more than 60 school districts.
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About Financial Industries Corporation
FIC, through its various subsidiaries, owns real estate, an actuarial consulting
firm, and markets and underwrites individual life insurance and annuity
products. For more information on FIC, go to http://www.ficgroup.com
This release may be considered proxy solicitation material. Information about
the participants in such solicitation may be found in a filing on Schedule 14A
made with the Securities and Exchange Commission (SEC) on April 18, 2003, or by
contacting the Company at 512/404-5000. Shareholders are urged to read the
Company's proxy statement carefully when it becomes available because it will
contain important information. The proxy statement and other relevant documents
will be available for free at the SEC's website at www.sec.gov, or by contacting
the Company at 512/404-5000.
This release may contain "forward-looking statements" within the meaning of the
United States Private Securities Litigation Reform Act of 1995. These statements
are based on management's current expectations and are subject to risks,
uncertainty and changes in circumstances, which may cause actual results,
performance or achievements to differ materially from anticipated results,
performance or achievements. Investors are reminded that these forward-looking
statements must be considered in conjunction with the cautionary warnings and
risk-factors which are detailed in the Company's most recent Annual Report on
Form 10-K , Quarterly Report on Form 10-Q, and its other filings with the
Securities and Exchange Commission. FIC is under no obligation to (and expressly
disclaims any such obligation to) update or alter its forward-looking statements
whether as a result of new information, future events or otherwise.
Contact: Bob Bender, Corporate Relations Officer, 512-404-5080,
bbender@ficgroup.com
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