This excerpt taken from the NFP 8-K filed Mar 10, 2005.
Transaction more than doubles NFPs production in the life brokerage general agent business
NEW YORK, NY National Financial Partners Corp. (NYSE: NFP) today announced that it has signed a definitive agreement to acquire Highland Capital Holding Corporation (Highland), a leading life insurance brokerage company. Highland is NFPs largest acquisition to date and represents a network of eleven divisions comprising twenty-one brokerage general agent (BGA) offices with combined revenues of approximately $62 million in 2004. The transaction, subject to customary closing conditions, is expected to close in the second quarter.
Highland provides valuable scale in the institutional and retail life insurance markets, broadens our geographic presence, and enhances our life insurance relationships, said Jessica Bibliowicz, NFPs Chairman and Chief Executive Officer. This acquisition provides valuable market share in the life brokerage market and builds on NFPs position as the leading independent distribution company serving the high-net-worth and entrepreneurial corporate markets.
Approximately 45% of Highlands life insurance production is from the institutional market, including national and regional banks, trust companies and broker/dealers. Highlands in-house expertise in serving these institutional accounts provides a valuable platform for further growth. Institutions represent a new market for NFP and one that has tremendous potential for increased penetration. From a geographic standpoint, Highlands presence in the Pacific Northwest, Midwest, and non-Florida Southeast regions are an attractive complement to NFPs existing network. We are very excited about the growth opportunities that Highland brings to NFP.
Rick Keidan, President and Chairman of the Board of Highland said, As part of NFP, Highland will be able to leverage NFPs marketing resources and continue to build its business. The combined scale of the organizations is differentiating and a valuable platform for future growth.
NFP has agreed to pay up to $48.4 million in a combination of cash and NFP common stock to holders of Highland debt, preferred stock, options and common stock. Highland was formed in 1998 to consolidate distribution in a model similar to NFPs. In 2001, the company consolidated its BGA operations into Highland Capital Brokerage, an entity with one common identity and integrated administrative and processing functions. Acquired base earnings of $6.1 million are based on capitalization of the brokerage divisions at the time of their respective acquisitions by Highland. However, based on the 2004 earnings of the acquired business, NFP believes that on an annual basis Highland would contribute approximately $8 million to NFPs gross margin.
Ms. Bibliowicz added, In addition to Highland and since our fourth quarter earnings release, NFP has completed two transactions with combined acquired base earnings of $2.1 million effective March 1st. Upon closing of the Highland acquisition, our total acquired based earnings in 2005 will be $15.8 million, which is slightly ahead of our goal of $13 to $15 million. Highland presents a unique transaction and we expect to continue to execute on our stated acquisition strategy.