[LOGO] [LOGO]
[UNUM] [PROVIDENT]
CONTACTS: FOR UNUM FOR PROVIDENT
Media: George Sard/David Reno Media & Analysts:
Catharine Hartnett Sard Verbinnen & Co. Thomas A. H. White
(207) 770-4356 (212) 687-8080 (423) 755-8996
Analysts:
Kent W. Mohnkern
(207) 770-4392
UNUM AND PROVIDENT ANNOUNCE STRATEGIC MERGER CREATING
GLOBAL LEADER IN DISABILITY INSURANCE
-----------------------------------------------------
PORTLAND, ME and CHATTANOOGA, TN, November 23, 1998 - UNUM Corporation
(NYSE: UNM) and Provident Companies, Inc. (NYSE: PVT) today jointly announced a
strategic merger that will create UNUMProvident, the global leader in disability
insurance and complementary special risk products and services.
Under the terms of a definitive merger agreement approved by the Boards of
both companies, Provident shareholders will receive 0.73 shares of UNUMProvident
in exchange for each Provident common share and UNUM shareholders will receive
one share of UNUMProvident in exchange for each UNUM common share. The
transaction will be accounted for as a pooling of interests and is expected to
be tax-free to shareholders of both companies.
Combined, UNUM and Provident have pro forma revenues of more than $8.4
billion for the twelve months ended September 30, 1998, a current market
capitalization of over $11 billion, 1997 earned premiums of $6 billion and a
significant presence in group and individual disability insurance, group life
insurance and voluntary benefits. Total combined assets exceed $38 billion as of
September 30, 1998. The companies expect the transaction to be accretive to
earnings per share in 1999. UNUMProvident anticipates achieving annual cost
savings of approximately $120-130 million.
James F. Orr III, 55, UNUM's chairman and chief executive officer, said,
"This unique strategic merger is the perfect fit of highly complementary,
healthy and growing businesses. The combination gives us enhanced financial
strength, expanded national and international distribution and comprehensive
product offerings to provide superior value and integrated
2
solutions to a broad range of customers. UNUM's leadership in group disability
and voluntary products combined with Provident's leadership in individual
products creates the clear leader in the still highly under-penetrated
disability market. It is our intention to take the absolute best of both
companies - cultures and employees, products and systems - and build an
organization that is capable of achieving far more together than either of us
could have on our own."
J. Harold Chandler, 49, Provident's chairman, president and chief
executive officer, said, "The merger with UNUM is the next logical step for
Provident and I couldn't be more proud of the result for our shareholders and
our many dedicated employees. Very importantly, our customers will benefit as we
accelerate the implementation of our plan to provide the marketplace with more
comprehensive disability insurance solutions featuring industry-leading
return-to-work programs. Together, UNUMProvident will have outstanding new
growth opportunities. We have already made substantial progress in defining the
new business model for the merged company and we intend to focus on realizing
the full potential of this unique combination for our shareholders, customers
and employees."
Upon the merger of the companies, Orr will serve as chairman and chief
executive officer of UNUMProvident and Chandler will serve as president and
chief operating officer. On July 1, 2001, Chandler will succeed Orr as chief
executive officer of UNUMProvident, and Orr will remain UNUMProvident's
chairman.
The UNUMProvident Board of Directors will be made up of eight current
members of the UNUM Board and seven current members of the Provident Board. The
only inside directors will be Orr and Chandler. The Executive Committee of the
Board will be comprised of Orr, Chandler, two current UNUM directors and two
current Provident directors.
Four other executives will comprise the senior UNUMProvident management
team along with Orr and Chandler. Thomas R. Watjen, currently vice chairman and
chief financial officer of Provident, will serve as executive vice president of
finance, with responsibility for financial operations, investments and portfolio
strategy, and corporate development. Elaine D. Rosen, currently president, UNUM
Life Insurance Company of America, the largest subsidiary of UNUM Corp., will
serve as executive vice president in charge of North American products,
underwriting, claims management, and customer service. Robert W. Crispin,
currently executive vice president of UNUM, will serve as executive vice
president in charge of North American distribution, Canadian operations, and
Colonial Life and Accident Insurance Company, a UNUM subsidiary. F. Dean
Copeland, currently executive vice president and general counsel of Provident,
will serve as executive vice president of legal and administrative affairs.
3
A transition and integration team responsible for overseeing the
combination of the two companies will be comprised of these six UNUMProvident
senior executives. The team will be chaired by Orr and coordinated by Watjen.
In addition, UNUM's chief financial officer, Robert E. Broatch, will serve
as chief financial officer of the combined company, reporting to Watjen.
Significant corporate operations of UNUMProvident will remain in both
Portland, Maine and Chattanooga, Tennessee. UNUMProvident plans to maintain
substantial operations in Columbia, South Carolina; Worcester, Massachusetts;
Toronto/Burlington, Canada; and in other North American cities and international
locations.
The transaction is expected to be completed by mid-1999 and is subject to
clearance or approval by certain federal and state regulators, approval by
shareholders of both companies, and customary closing conditions. Members of the
Maclellan family representing approximately 26% of Provident's common stock have
agreed to vote in favor of the merger. Zurich Centre Group and its affiliates,
who hold approximately 14% of Provident's common stock, have also advised the
companies that they intend to vote in favor of the merger.
As a result of the merger, approximately 58% of UNUMProvident will be
owned by current UNUM shareholders and 42% of UNUMProvident by current Provident
shareholders.
Effective immediately, both UNUM and Provident have rescinded their
existing share repurchase programs. The merger agreement provides for the
payment of termination fees under certain circumstances and UNUM and Provident
have also entered into customary "cross" stock option agreements.
Based in Chattanooga, Provident, through its subsidiaries, is a leading
provider of disability insurance and related products for individual and
corporate customers. Provident has significant operations throughout the U.S.
and Canada.
Based in Portland, UNUM, through its businesses, is the world leader in
group disability insurance and ranks among the world's leading special risk
insurers. UNUM's companies are leading providers of disability insurance in
North America and the United Kingdom, as well as providers of other employee
benefits, including group life insurance, long term care insurance and
payroll-deducted voluntary benefits offered to employees at their worksites.
UNUM has operations in the United States, Canada, the U.K., the Pacific Rim,
Europe, Latin America and Bermuda.
# # #