Building Block in Financial Services Network
HIGH RIVER, AB May 26, 2004 — – Western Financial Group (“Western Financial Group” or “the Company”; (TSX: WES, WES.DB.A) is pleased to announce it has agreed to acquire all of the outstanding common shares of Federated Life Insurance Company of Canada (“Federated Life”) from Federated Holdings of Canada Ltd. (“Federated Holdings”), a wholly owned subsidiary of Northbridge Financial Corporation (“Northbridge”).
The value of the transaction totals $56.9 million, comprising $20 million purchase price of the common shares and $36.9 million in assumed assets and liabilities. The deal will be funded through current cash reserves, a $5 million private placement of common shares and utilization of the Company’s senior debt facilities. The private placement will consist of approximately 2 million common shares at $2.50 per share. CIBC World Markets is acting as Western’s exclusive financial advisor in connection with the acquisition and sole agent in connection with the private placement. The deal, subject to regulatory approval, is expected to close in the third quarter 2004.
Western to sell Federated Life’s group life and health products
“This acquisition substantially completes the product line for the integrated financial services package that Western Financial Group has been building since 1996,” says Scott Tannas, President and Chief Executive Officer of Western Financial Group. “We have been looking for a group life and health insurance acquisition, and Federated Life is definitely the best fit for us. Because their primary operating area is in the West, we know and understand their customer base. We are very comfortable entering into this transaction and the long-term relationship that flows from it. We do a significant amount of business, and enjoy a very positive relationship, with Federated Holdings’ parent company, Northbridge Financial Corporation.”
Unique collaborative distribution agreement
The deal includes a multi-year joint marketing and support agreement between Western Financial Group and Federated Holdings, where Western Financial Group and Federated Holdings’ Property & Casualty networks will work together to sell Federated Life products to their respective customer bases.
Winnipeg Operations Center
Federated Life’s operations centre will remain in Winnipeg, and no changes to management or staffing levels are expected. “It is important to us that Western Financial Group retain the operations centre and staff,” says Byron Messier, President and Chief Executive Officer of Northbridge. “This underscores the value of having a partner both Northbridge and Federated are comfortable working with to provide our products.”
John Paisley, President of Federated Holdings agrees. “We will continue to compete for new customers without disrupting existing client relationships. I have a high degree of confidence that both Western Financial Group and Federated property and casualty customers will benefit from this deal.”
About Federated Life Insurance Company of Canada
Federated Life is a wholly owned subsidiary of Federated Holdings of Canada Ltd., which is wholly owned by Northbridge. Federated Life offers life and health insurance products to the same customer base as its affiliate, Federated Insurance Company of Canada, a provider of property, automobile and general liability insurance products for commercial businesses. Federated Insurance Company of Canada is not part of the acquisition and will remain a subsidiary of Northbridge.
About Western Financial Group
Western Financial Group is one of the leading Western-based financial services networks operating in Western Canada. With offices in towns and cities across the West, the Company provides over 170,000 customers with insurance, investment and banking services through its WFG Agency Network, Bank West and The Western Mutual Fund Company.