ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, August 6, 1996 TAG: 9608060062
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: From Wire Reports
General Electric Capital Corp. will acquire Richmond-based First Colony Corp. in a $1.8 billion cash transaction that is expected to close by the end of the year, the companies said Monday.
First Colony is a holding company that owns First Colony Life Insurance Co., based in Lynchburg, and its wholly owned subsidiary, American Mayflower Life Insurance Company of New York. Both will become subsidiaries of GE Capital Assurance, a GE Capital company.
GE Capital will pay $36.15 a share for First Colony, a life insurer that sells annuities, term insurance and structured settlements.
GE Capital is trying to offer more retirement-related financial services and advice. Opportunities are growing in the field as companies shift from traditional pension plans to 401(k) plans and Individual Retirement Accounts, GE Capital Assurance President Patrick Welch said.
``It's really our goal to be the leader in providing solutions for wealth accumulation.'' he said. ``Americans are getting older and they're living longer, so they have to have a longer time perspective.''
It's also a ``strong low-cost platform for producing term insurance,'' or basic life insurance, which First Colony sells through a network of independent agents, Welch said.
First Colony employs 1,050 workers in three locations, but the bulk, 950, are in Lynchburg.
Welch wouldn't say how many First Colony employees will be fired as a result of the takeover. ``Realistically, as you acquire a number of companies, you do have to take opportunities to lower the cost structure wherever possible,'' he said.
First Colony will stay in Lynchburg for ``an indefinite period of time,'' he said.
GE's strategy reflects the blurring lines between life insurance companies and financial service companies as they compete for the retirement savings of baby boomers. In the past year, GE Capital has also purchased the life insurance unit of American Express Co. and two units of Aon Corp.
The acquisition of First Colony will add $11 billion of assets to GE Capital's insurance and savings businesses, bringing the assets at GE Capital Services to $185 billion.
The announcement sent First Colony's stock up $4.75 Monday to $34.75 a share, an increase of 15.8 percent.
Before the sale can be completed, it must meet with state insurance regulatory approval in Virginia and New York.
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