CONNING
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Investor Contact: Fred M. Schpero
or Paul Kopsky, Jr.
(314) 444-0715
Media Contact: David Garino
(314) 982-1700
Internet: http://www.conning.com
For Immediate Release
CONNING TO ACQUIRE SPECIALTY ASSET MANAGER
St. Louis, July 2, 1998--- Conning Corporation (NASDAQ NMS: CNNG) announced
today it entered into a definitive agreement to acquire substantially all of the
assets and operations of Schroder Mortgage Associates LP (SMA), a specialty
asset manager providing mortgage products and servicing to institutional buyers
of commercial mortgages and mortgage-backed securities. SMA's asset management
capabilities include commercial whole loan and mortgage-backed portfolio
management, mortgage servicing and securitizations of commercial loans.
The acquisition is expected to be accretive to earnings within the first 12
months and will be treated as a purchase. The purchase price will include an
initial cash payment of approximately $21.0 million, including acquisition
expenses, plus additions contingent consideration payments of up to $4 million
over the next three years, subject to meeting certain financial targets.
The SMA acquisition will expand Conning's asset management products and services
and complement its existing mortgage loan capabilities within its asset
management group. The acquisition also expands Conning's existing and potential
client base in the investment community for its mortgage products and services.
As a result, this should increase the utilization of Conning's 10 loan
origination field offices which provide whole loans for asset management clients
and for highly rated securitizations. The additional securitization capabilities
provided by SMA are expected to generate a stream of revenues with attractive
margins.
"We believe SMA's operations will strengthen our already leading position in the
mortgage loan and real estate arena relative to the competition," said Leonard
M. Rubenstein, Chairman and Chief Executive Officer. "This acquisition
accelerates our expansion plans into securitizations with more expertise.
Additionally, we will have an engine to generate additional recurring revenues
in all facets of the business including loan origination, securitization and
servicing."
Conning has had a close business relationship with Schroder Mortgage Associates
for approximately two years, providing mortgage loans to SMA for pension clients
and securitizations. The acquired operations led by Gregory A. White will be
part of Conning's mortgage loan and real estate group. Mr. White's credentials
and expertise will be an outstanding addition to Conning's existing mortgage
loan and real estate team. Conning will be able to use its existing accounting,
servicing and administrative infrastructure to absorb those functions currently
being performed by SMA.
"The combination of our two operations not only is complementary but enables us
to deliver an enhanced line of products and services to our existing asset
management clients," according to Michael D. McLellan, Conning's Senior Vice
President - Mortgage Loans and Real Estate. "Additionally, the strength and
depth of our combined operations will enable us to penetrate new opportunities
and relationships. Commercial mortgages and mortgage-backed securities continue
to be in demand as an asset class for the insurance industry as well as an
increasingly important asset class to the pension fund community," he said.
The transaction is expected to close during the third quarter of this year,
subject to customary conditions.
The preceding discussion of expected results may constitute forward-looking
statements. Actual results could differ from expected results due to various
factors, including whether the revenue contribution and accretion of SMA's
operations have been projected accurately.