Securitas Capital and Risk Capital Reinsurance To Make Strategic Investment In PennCorp

PennCorp Financial Group, Inc. says it has reached an agreement in principle with a strategic investment group led by Securitas Capital, LLC and Risk Capital Reinsurance Company regarding the purchase of up to $75 million of newly issued common stock at a price which reflects the company's tangible book value as of the date of closing. Such book value is expected to be in excess of the closing price as of July 17, 1998. In connection with the investment, which is subject to the completion of due diligence, the negotiation of definitive documentation and certain regulatory approvals, up to two nominees of Securitas Capital and Risk Capital Re will be appointed to the PennCorp board of directors.

Confirming their confidence in PennCorp's future and the company's value-maximizing initiatives, certain independent directors of PennCorp, including Lewis L. Glucksman, chairman of the executive committee of PennCorp's board of directors and a former vice chairman of the investment banking firm Salomon Smith Barney, and Bruce Schnitzer, chairman of Wand Partners, Inc., currently intend to purchase common stock through open market purchases, subject to normal black-out periods. The company intends to announce its second quarter results on or before August 14, 1998.

David J. Stone, chairman and CEO of PennCorp, says, "We are very pleased with the statement of confidence expressed in the company's future by Securitas, Risk Capital Re and our Board members and we look forward to having the strategic investment group join our investor base. Both Securitas Capital and Risk Capital Re will be valuable partners to PennCorp as it continues the process of maximizing shareholder value."

On February 18, 1998 PennCorp announced that it had engaged Salomon Smith Barney and Fox-Pitt, Kelton, Inc. to explore strategic alternatives available to the company in order to maximize shareholder value, including the possible sale of its Career Sales Division. Based on discussions with prospective purchasers, the company believes that the proceeds of such a sales transaction for that division are likely to be materially less than the company's original expectations. In part, this is due to a possible $25 million increase in the statutory reserves of the Career Sales Division. While continuing to pursue the outright sale of the Career Sales Division to a number of potential purchasers, management is also evaluating other strategies to achieve maximum value for this asset, including a sponsored spin-off, potentially led by the strategic investment group. Besides the sale or spin-off of the Career Sales Division, management is continuing to pursue other components of its value-maximizing program.

In addition to this announcement, and in light of recent events, the executive committee made the following observations:

• The company believes that it is adequately capitalized and has adequate resources to meet its ongoing obligations. Other than the possible Career Sales Division reserve adjustment, the company is aware of no insurance regulatory issues that would have a material negative impact on the company's financial position.
• PennCorp has reported positive operating earnings in every year since its initial public offering, and expects to announce positive operating earnings from its retained businesses in 1998.
• At March 31, 1998, PennCorp Financial Group, Inc. reported shareholders' equity of $889 million and book value per share of $22.39. The company also estimates that including possible revisions to its book value as a result of the adjustments related to the Career Sales Division, book value is expected to remain significantly in excess of the July 17th closing price of PennCorp's common stock.

Securitas Capital, LLC is a global equity investment firm dedicated to making minority and majority investments exclusively in insurance related companies. Formed in 1995 with total capital commitments of $500 million by Swiss Reinsurance Company and Credit Suisse Group, Securitas Capital provides investment sponsorship as an active shareholder in close partnership with management teams, insurance groups and other corporate and financial investors.

Risk Capital Reinsurance Company provides reinsurance and other forms of capital either on a stand-alone basis, or as part of integrated solutions for insurance companies with capital needs that cannot be met by reinsurance alone.

PennCorp Financial Group, Inc. is an insurance holding company. Through its subsidiaries, the Company underwrites and markets life insurance accident and sickness insurance to the middle market throughout the United States and Canada.