Exhibit 99.1
Scottish Re Group Limited To Acquire ING Re's U.S. Individual Life Reinsurance
Business
HAMILTON, Bermuda--(BUSINESS WIRE)--Oct. 18, 2004--Scottish Re Group Limited
(NYSE: SCT), a global life reinsurance specialist, today announced that it has
agreed to acquire the individual life reinsurance business of ING Re. The
transaction is expected to close by year end 2004.
Scottish Re and ING Re have complementary, broadly diversified books of
traditional life reinsurance business with minimal overlap. This
transformational transaction will allow Scottish Re to further increase its new
business production while also giving Scottish Re the opportunity to further
enhance its operational infrastructure and achieve economies of scale. This
acquisition expands Scottish Re's North American platform, making it the 3rd
largest life reinsurer by volume of U.S. life reinsurance in-force. Following
the acquisition, Scottish Re will have approximately $1 trillion of face amount
of life reinsurance in-force, $8.8 billion in assets, $2.1 billion in revenues,
and a capital base of approximately $1.3 billion.
Scottish Re and ING have agreed that ING will transfer the assets and reinsure
the liabilities of all of its U.S. individual life reinsurance business to
Scottish Re through a co-insurance transaction. Pursuant to the reinsurance
agreement, ING will transfer to Scottish Re assets equal to reserves of
approximately $800 million and pay Scottish Re a ceding commission of $560
million. These assets will be held in trusts to secure the reserve obligations
of the business. Additionally, ING will transfer certain operating assets
associated with the business. Scottish Re will assume the obligations of the
business, including client service, administration and claims payments. All
future business after the closing of the transaction will be written by Scottish
Re, on terms and conditions consistent with Scottish Re's existing business.
The business being transferred consists of traditional mortality business, which
in the life reinsurance industry requires collateral to satisfy the reserve
requirements of Regulations XXX and AXXX. As part of the transaction, ING will
further provide collateral support for all current and future XXX and AXXX
reserves for the duration of the business. Scottish Re will pay ING a facility
fee for such collateral support until alternative collateral solutions are put
in place to relieve ING of this obligation.
In addition to the assets to be transferred by ING Re, Scottish Re will raise an
additional $230 million in new capital, which will satisfy the capital
requirements for the acquired business. This new capital includes $180 million
to be provided by The Cypress Group, a New York private equity firm, and an
additional $50 million of trust-preferred securities. Scottish Re management
anticipates that the acquisition pro forma for the new capital will be
immediately accretive to Scottish Re's return on equity and earnings per share
upon closing.
"We see this as a transforming transaction for Scottish Re which largely expands
and diversifies our U.S. mortality risk business. We are not only increasing our
U.S. portfolio and gaining access to new clients, we will also retain a larger
core group of qualified reinsurance specialists, and the technology needed to
minimize transition risk and potentially aid in future expansion," stated Scott
Willkomm, President of Scottish Re Group Limited . "We believe we have
structured an excellent transaction with ING that will immediately enhance
shareholder value while allowing ING to divest non-core assets. We are thrilled
that Cypress, which has a successful track record of investing in insurance
businesses, has made a capital commitment to Scottish Re."
"We are very pleased to support Scottish Re in its transaction with ING," said
William Spiegel, a Managing Director of The Cypress Group. "ING Re's portfolio
of business is a superb complement to Scottish Re's existing reinsurance lines,
and will position Scottish Re to grow as one of the industry's leading and
largest life reinsurers. This marks Cypress' fourth investment in the insurance
sector, and we look forward to continuing to work with Scottish Re as they
complete this acquisition and implement plans for future growth."
ING is exiting the individual life reinsurance business as a result of its
strategic realignment of its portfolio businesses. The assumption of the
business by Scottish Re will ensure that its contracts are properly fulfilled
and seamlessly transferred to a trusted reinsurance player.
"ING's U.S. Financial Services strategy is increasingly focused on asset
accumulation and asset protection for the middle market and mass affluent
segment," said Fred Hubbell, member of ING Group's Executive Board and chairman
of Insurance Americas. "Although the life reinsurance business is no longer core
to ING, we believe that it is an attractive asset for Scottish Re, whose primary
focus is on life reinsurance and can achieve synergies through integration."
About Scottish Re
Scottish Re Group Limited is a global life reinsurance specialist. Scottish Re
has operating companies in Bermuda, Charlotte, North Carolina, Dublin, Ireland,
Grand Cayman, and Windsor, England. Its flagship operating subsidiaries include
Scottish Annuity & Life Insurance Company (Cayman) Ltd. and Scottish Re (U.S.),
Inc., which are rated A- (excellent) by A.M. Best, A (strong) by Fitch Ratings,
A3 (good) by Moody's and A- (strong) by Standard & Poor's, Scottish Re Limited,
which is rated A- (excellent) by A.M. Best, A (strong) by Fitch Ratings and A-
(strong) by Standard & Poor's and Scottish Re Life Corporation, which is rated
A- (excellent) by A.M. Best. Additional information about Scottish Re Group
Limited can be obtained from its website, www.scottishre.com.
About The Cypress Group
The Cypress Group is a New York-based private equity group which manages two
private equity funds with more than $3.5 billion in commitments. Cypress invests
in privately negotiated transactions, targeting operating businesses and
investing with management to foster continued growth. Cypress has committed over
$4 billion in 30 transactions. Investments made by Cypress include Montpelier Re
Holdings, Ltd. ; Catlin Group Ltd. ; Financial Guaranty Insurance Company
(FGIC); Cinemark, Inc. ; AMTROL, Inc. ; Williams Scotsman, Inc.; WESCO
International, Inc. ; ClubCorp, Inc. ; Danka Business Systems PLC ; MedPointe
Inc. ; Republic National Cabinet Corp.; The Meow Mix Company; and Communications
& Power Industries, Inc. The Cypress website address is: www.cypressgp.com.
About ING
ING Groep N.V. is a global financial institution of Dutch origin offering
banking, insurance and asset management to over 60 million private, corporate
and institutional clients in more than 50 countries. With a diverse workforce of
over 115,000 people, ING comprises a broad spectrum of prominent companies that
increasingly serve their clients under the ING brand.
In the U.S., the ING family of companies offer a comprehensive array of
financial services to retail and institutional clients which include life
insurance, retirement plans, mutual funds, managed accounts, alternative
investments, direct banking, institutional investment management, annuities,
employee benefits, financial planning, and reinsurance. ING holds top-tier
rankings in key U.S. markets and serves over 14 million customers across the
nation. For more information, visit www.ing.com.
Conference Call Information:
Scottish Re will host a conference call and webcast today, October 18, 2004, at
10:00 a.m. EDT to discuss the acquisition. To participate in the call, please
dial 1-888-214-0355 (domestic US) or 1-703-788-0600 (international) fifteen
minutes prior to the start of the call and tell the operator that you are
dialing into the Scottish Re Corporate Merger and Investor Announcement. The
webcast will be available at the following address:
http://ims.intellispace.net/medialink/20041018 as well as through the Scottish
Re website, www.scottishre.com, where the slides will also be available for
viewing.
A replay of the conference call will be available by dialing 1-800-416-8127,
access code: # 520838 (domestic US) or 1-703-773-1049, access code: # 520838
(international) for three months.
Certain statements included herein are "forward-looking statements" within the
meaning of the federal securities laws. The management of Scottish Re Group
Limited cautions that forward-looking statements are not guarantees, and that
actual results could differ materially from those expressed or implied in the
forward-looking statements. Important events that could cause the actual results
of operations or financial condition of the Company to differ include, but are
not necessarily limited to, the Company's ability to attract clients and
generate business; the competitive environment; the Company's ability to
underwrite business; performance of outside service providers; mortality risk;
surrender risk; investment risk (including asset value risk, reinvestment risk
and disintermediation risk); the impact of unforeseen economic changes (such as
changes in interest rates, currency exchange rate, inflation rates, recession
and other external economic factors); the impact of terrorist activities on the
economy, the insurance and related industries in general and the Company in
particular; regulatory changes (such as changes in U.S. tax law and insurance
regulation which directly affect the competitive environment for the company's
products); rating agency policies and
practices; and loss of key executives. Investors are also directed to consider
the risks and uncertainties discussed in documents filed by the Company with the
Securities and Exchange Commission.
CONTACT: Scottish Re:
Brunswick Group
Ellen Barry or Melissa Daly, 212-333-3810
or
ING Re
Diana Stotler, 303-860-2521
or
ING Americas
Dianne Bernez, 770-618-3910
or
ING Group
Dorothy Hillenius, +31 20 541 6522
or
The Cypress Group:
Kekst and Company
David Lilly or Thomas M. Daly, Jr., 212-521-4800
SOURCE: Scottish Re