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WEDNESDAY, NOVEMBER 14, 2007
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Decatur's Mutual Savings being sold
Chicago company buying insurance firm; no news on status of employees

By Eric Fleischauer
eric@decaturdaily.com 340-2435

A Chicago-based company is buying Decatur-based Mutual Savings for $96 million in cash, the companies announced Monday evening.

Neither Mutual Savings — owned by Primesco Inc., a holding company — nor Unitrin said whether Mutual Savings will remain in Decatur or whether its 115 Decatur employees will keep their jobs.

Clark Whitaker, senior vice president of Primesco, would not comment on the transaction. He said Unitrin would determine the impact, if any, on Mutual Savings employees when the sale is finalized.

Calls and e-mails to six different Unitrin officials went unanswered Tuesday.

According to a source close to Mutual Savings, who declined to be identified, Mutual Savings management announced the planned acquisition to field personnel Monday and to home office employees Tuesday. At the home office meeting, the source said, a company official told employees he did not know whether Unitrin would keep them.

The sale is conditioned on shareholder approval and approval by the Alabama Department of Insurance.

"They gave us a heads up last week that it was happening," said Department of Insurance spokes-man Ragan Ingram.

He said documents detailing the transaction must be field within 15 days of the sale's completion, but the documents will not include information on the status of existing employees.

First quarter of 2008

Unitrin said in a statement that it expects the sale to close in the first quarter of 2008.

"We are extremely pleased at the prospect of Primesco and its flagship companies," said Unitrin Chief Executive Officer Donald G. Southwell in a press release. "This acquisition underscores our commitment to grow our Career Agency business segment and to continue to serve an otherwise underserved part of the life and health insurance market place."

According to its Web site, Unitrin's Career Agency segment focuses on customers with household incomes below $25,000.

The sale includes Mutual Savings Life Insurance and Mutual Savings Fire Insurance, both wholly owned subsidiaries of Primesco.

Unitrin provides property and casualty insurance, life and health insurance, and consumer finance services to individuals and small businesses nationwide.

The company is publicly traded on the New York Stock Exchange under ticker symbol UTR. Its share price has trended from $30 to $45 over the last five years. Its market capitalization is almost $3 billion.

39 district offices

Mutual Savings has 39 district offices in Alabama, Mississippi and Georgia, according to its Web site. Twenty-six are in Alabama.

Mutual Savings sells insurance "to persons of modest financial means" with "a network of employee agents who call on customers in their homes to sell and service products and collect premiums," according to a Unitrin press release.

A.M. Best rates Mutual Savings as a "B-," in a rating system that runs from "A++" to "F." Unitrin has an "A" rating.

Mutual Savings' emphasis is life insurance, but it also markets cancer insurance, annuities, fire insurance and accident policies, according to its Web site.

Mutual Savings' net income in 2003, the most recent year available, was $10.1 million. Its net income was $3.8 million in 1998, when Primesco purchased the company.

Its premium revenue in 2006 was $53 million.

Unitrin's net income in 2006 was $283.1 million.

Mutual Savings history

Mutual Savings opened in 1927, with $6,000 in paid-in capital, in a one-room office on Bank Street Northwest. In 1975, it moved into a building at U.S. 31.

The family of Louis J. Roussel Jr., a New Orleans businessman, took control of the company in 1969. In 1988, after a bitter dispute, an Employee Stock Ownership Plan bought the company. It paid Roussel $92 a share for his controlling interest at a time when the market price was estimated at about $30 per share.

Employees bought the company in part to keep it in Decatur. Roussel had announced his intent to sell, and local officials feared it would lose the city's largest locally based company.

Soon after the sale, minority shareholders sued Roussel for, among other things, using corporate assets to loan money to a family-owned dog track and purchasing a corporate jet for private use.

The minority shareholders also sued former Mayor J. Gilmer Blackburn who, after serving as mayor, helped engineer the sale.

Blackburn's law firm received a $727,599 fee for the transaction and he became chairman of the Mutual Savings board of directors.

At the time, Blackburn said he was proud of his role in the sale.

"If no one had stepped up," he said, "the company would be gone. The employees would be terminated or working somewhere else."

The lawsuit settled seven years later, with Blackburn successful in keeping his fees.

Primesco purchase

Another bitter contest for control of Mutual Savings took place in 1998. After 18 months of hostile and friendly takeover offers, the employee-shareholders sold their interests in the company to Primesco Inc. for $68 million. C. Larimore Whitaker controlled Primesco. One of Primesco's shareholders was NBA star Charles Barkley.

Mutual Savings announced the sale of the building on U.S. 31 to Central Baptist Church in May.

In a statement released shortly before the sale, Mutual Savings said, "The corporation has been looking for ways to run the company more efficiently. Although the building we currently occupy is very attractive, technology today can allow us to operate in a much smaller facility."

In September, Mutual Savings moved into the downtown AmSouth building, which was vacated after Regions Bank acquired AmSouth.

Bank officials did not immediately return calls or respond to e-mails inquiring as to the duration of Mutual Savings' lease.

Unitrin shares were up 2.7 percent Tuesday, closing at $45.93.

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