Saturday, August 28, 1999

Western-Southern unit buys asset managers

Deal estimated at $50 million

The Cincinnati Enquirer

        Western-Southern Life Insurance Co.'s investment unit has agreed to buy the asset-management arm of Countrywide Financial Services Inc., allowing it to expand into a new business and boost fee income.

        The acquisition of the Cincinnati-based division, Countrywide Financial Services Corp., will be the second purchase in eight months by Fort Washington Investment Advisors Inc., the investment arm of Western-Southern.

        The deal means that Fort Washington will pick up $1.3 billion in assets under management and $15.4 billion in assets under administration from Countrywide Financial, the nation's largest nonbank mortgage lender.

        Though terms of the deal were not disclosed, one Wall Street analyst estimated its value at $50 million.

        The deal is a major one for Western-Southern as it allows the company to beef up its investment subsidiary and generate additional fee income by serving new clients.

        The deal also calls for Countrywide Financial Services' 130 employees to continue to provide licensing and compliance services to third-party managers of mutual funds. Those services will allow Western-Southern to expand its product offerings.

        With the deal, Western- Southern also will pick up Countrywide Financial's 16 mutual funds with 24,000 investors, as well as manage accounts for many affluent individual and institutional clients. The deal will boost Western-Southern's family of mutual funds to 24.

        Analyst Paul Mackey of Buckingham Research Group in New York said the acquisition also provides Western-Southern a chance to cross-sell life-insurance products to the additional clients. He estimated the deal could contribute about $10 million to its annual profits.

        Fort Washington was formed in 1991 to be the investment management subsidiary of Western-Southern Life Insurance Co. It bought Todd Investment Advisors, a Louisville-based asset and investment management firm earlier this year.

        The latest deal, expected to be completed in three months, will boost Western-Southern's assets owned or under management to $20 billion.


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- Western-Southern unit buys asset managers