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Rating:Deal Sends $515 Million of Assets to Federated Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, April 15, 2011

Deal Sends $515 Million of Assets to Federated

Reported by Armie Margaret Lee

Federated Investors [see profile] is picking up EquiTrust Mutual Funds' $515 million of AUM. Terms of the transaction were not made public.

Federated Investors
Pittsburgh-based Federated plans to reorganize the portfolios of EquiTrust Series Fund Inc. and EquiTrust Variable Insurance Series Fund into nine comparable mutual funds managed by Federated, company spokeswoman Meghan McAndrew told The MFWire.com.

The EquiTrust Mutual Funds are currently managed by EquiTrust Investment Management Services Inc., an affiliate of West Des Moines, Iowa-headquartered FBL Financial Group.

"We wanted to focus on our core competencies: life insurance, annuities, and property and casualty insurance," said FBL spokeswoman Kathleen Till Stange. "This reorganization will allow our mutual fund shareholders to be part of larger funds."

FBL's decision to exit the proprietary mutual fund business will result in the elimination of 10 jobs, mostly in the accounting department, she said.

As for the funds' portfolio managers, they will continue to manage FBL's general accounts.

FBL has had proprietary mutual funds since the early 1970s.

Farm Bureau Life Financial Services agents will continue to sell third-party mutual funds. With the Federated deal, the agents will now also distribute Federated mutual funds alongside products from nine other fund firms with which FBL has distribution relationships.

Keefe, Bruyette & Woods served as FBL's investment banker on the deal. Federated did not use an i-banker.
Company Press Release

Federated Investors, Inc. and EquiTrust Mutual Funds Announce Transition of Assets

(PITTSBURGH, Pa., April 15, 2011) — Federated Investors, Inc. (NYSE: FII), one of the nation’s largest investment managers, announced today that it has reached an agreement to reorganize the portfolios of EquiTrust Series Fund, Inc. and EquiTrust Variable Insurance Series Fund into comparable mutual funds managed by Federated. The EquiTrust Mutual Funds, currently managed by FBL Financial Group, Inc. (NYSE: FFG) affiliate EquiTrust Investment Management Services, Inc., consist of approximately $515 million in equity, fixed income and money market assets. The announcement was made by J. Christopher Donahue, president and chief executive officer of Federated Investors, and James E. Hohmann, chief executive officer of FBL Financial Group, Inc.

As a part of the transaction, the portfolios of EquiTrust Series Fund, Inc. and EquiTrust Variable Insurance Series Fund will be transitioned into existing Federated mutual funds with similar investment objectives. The financial terms of the agreement were not disclosed.

"These reorganizations will allow EquiTrust Mutual Fund shareholders to participate in a significantly larger—and more diverse—family of funds with similar investment objectives," said Hohmann. "Federated Investors is a leader in asset management and mutual fund administration, and our boards are confident that our shareholders will benefit from this access to an expanded set of fund options as they focus on their financial goals and objectives."

The boards of directors of Federated Investors, the Federated Funds and the EquiTrust Funds have approved the planned transitions, which are now subject to the approval of EquiTrust Mutual Fund shareholders. It is anticipated that the EquiTrust Mutual Funds’ shareholder meetings to approve these reorganizations will be held in July 2011.

"As the landscape for investment managers has evolved over the past several years, more firms have approached Federated about opportunities for business transactions that help them better accommodate their strategic plans," said Donahue. "We are pleased EquiTrust chose to work with Federated, and we will continue to look for opportunities to work with insurers, banks and broker-dealers as they evaluate their long-term goals."

FBL Financial Group, headquartered in West Des Moines, Iowa, is a holding company whose primary operating subsidiaries are Farm Bureau Life Insurance Company and EquiTrust Life Insurance Company. FBL currently underwrites, markets and distributes life insurance, annuities and mutual funds to individuals and small businesses. In addition, FBL manages all aspects of two Farm Bureau affiliated property-casualty insurance companies for a management fee and sponsors the EquiTrust Mutual Funds. For more information, visit FBLFinancial.com.

Federated Investors, Inc. is one of the largest investment managers in the United States, managing $358.2 billion in assets as of Dec. 31, 2010. With 136 funds and a variety of separately managed account options, Federated provides comprehensive investment management to approximately 5,000 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. For more information, visit FederatedInvestors.com.

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