HC2 Signs Definitive Agreement for the Acquisition of American Financial Group's Long-Term Care Insurance Businesses

HC2 Holdings, Inc. ("HC2") (NYSE MKT:

) is pleased to announce that it has signed a definitive agreement for the acquisition of long-term care and life insurance businesses, United Teacher Associates Insurance Company ("United Teacher") and Continental General Insurance Company ("Continental General"), pursuant to an agreement with American Financial Group, Inc.

(the "Seller") for an initial payment of $7 million in cash and HC2 securities. The purchase price is subject to adjustment based on certain items, including operating results through the closing date. "This transaction marks a significant milestone for establishing our insurance platform, while also supporting the continued growth of HC2," said Philip Falcone, Chairman, President and Chief Executive Officer of HC2. "Given my prior role and experience investing in the insurance space, I believe this transaction specifically -- and the sector more broadly -- could be a big value driver for HC2. We are thrilled to partner with Jim Corcoran as the new Executive Chairman of our insurance unit, Continental Insurance Group Ltd., as Jim has significant experience in the insurance industry on both the corporate and regulatory side as the former Superintendent of the New York Insurance Department. Together with Jim, and the management team we're bringing over from AFG, we see an opportunity to build an attractive portfolio of insurance businesses creating significant shareholder value." The purchase price will be paid in a mix of cash, issuance of 11.000% Senior Secured Notes due 2019 and new shares of common stock of HC2 (subject to adjustment as set forth in the Stock Purchase Agreement). As of December 31, 2014, United Teacher's and Continental General's statutory capital was approximately $77.6 million with nearly $1.2 billion of total combined investment assets under management. This acquisition represents HC2's ongoing vision to acquire operating businesses across a diversified range of industries and to branch out into new verticals. The acquisition is subject to customary closing conditions, including receipt of regulatory approvals by the Texas and Ohio insurance departments. HC2 expects the transaction will close during the third fiscal quarter. Macquarie Capital is acting as financial advisor and Debevoise & Plimpton LLP is acting as legal advisor to HC2 in the transaction. Please refer to HC2's Current Report on Form 8-K to be filed with the Securities and Exchange Commission for a more complete description of the terms and conditions of the Stock Purchase Agreement.