FL Group has bought 46% of TM shares New chapter in FL Group's history Transaction financed with new shares in FL Group TM gets a powerful financial backer FL Group's cash flow to increase FL Group has signed an agreement with the companies Glitnir Bank, Hnotskurn ehf. and Samherji hf. to buy all their shares in Reykjavik based insurance company TM, all in all 46.2% of TM's shares at the price of ISK 47 a share, equalling the amount of ISK 24 billion. The sellers will recieve their payment in FL Group shares and will be handed 973,673,140 shares at the price of ISK 24.3 a share. Prior to this transaction FL Group held 37.6% of the shares in TM so it now controls 83.7%. The finalization of the agreement is dependent upon approval of FL Group shareholders. A shareholder meeting will be held on September 25th. At the meeting the FL Group Board of Directors will propose an issuance of new shares because of this transaction. The agreement must also be approved by the Financial Supervisory Authority. FL Group will make a voluntary offer to acquire the shares of all shareholders of TM and it is assumed that the company will be delisted from the OMX Reykjavik. On the grounds of this transaction FL Group's equity will increase by ISK 24 billion and the company will become stronger. FL Group's total assets at the end of the second quarter amounted to ISK 320 billion. At the same time TM's assets were around ISK 75 billion. FL Group has therefore in the year of 2007, continued to grow fast and expand its operations. Its total assets at the beginning of the year were ISK 263 billions. FL Group believes that it has now opened up a whole new area of possibilities and that its growth prospects in the financial markets have increased. This is the first step for FL Group into the insurance market, but earlier it has identified the banking market as one of its key sectors where FL Group is the largest sharholder in Glitnir Bank and has a considerable stake in Commerzbank. This transaction also marks the beginning of a new chapter in FL Group's history, as an operational company will again become a part of the group. This will also strengthen the operation of the company. TM is a strong company with an excellent position in the Icelandic insturance market and has experienced a significant growth in its operations in Norway where TM owns the fast growing insurance company Nemi. FL Group believes that TM can take advantage of the many possibilities that are to be explored in the international insurance market. Hannes Smarason, CEO of FL Group said: “TM will be another foundation for FL Group to build its operations upon. TM fits our structure perfectly and underlines the emphasis that we want to stress in the financial sector. We will put our efforts into strengthening TM and its position both home and abroad and we do believe that its growth prospects are good.FL Group is constantly exploring exciting opportunities and it might suit TM to be a part of some of them. It is therefore clear that there are exciting times ahead.“ Further information FL Group Kristján Kristjánsson, Director Corp. Communications Tel: 00 354 591 4427 About FL FL Group is an international investment company focusing on two areas of investment. The majority of its operations are run through the Private Equity and Strategic Investment division which can take stakes in listed and private companies as well as lead private equity buy-outs. The Capital Markets division is a proprietary trading desk focused on taking short-term positions for profits in primarily equities, bonds and currencies. With head office in Reykjavik and offices in London and Copenhagen, FL Group invests in companies worldwide, with a special focus on Europe. FL Group is listed on the OMX Nordic Exchange in Reykjavik (OMX: FL). At the end of the second quarter 2007, FL Group's total assets amounted to ISK 319.6 billion (EUR 3.8 billion). Its market capitalisation at the end of June 2007 was ISK 234.4 billion (EUR 2.8 billion). The largest shareholders of FL Group are Oddaflug BV (20.8%), owned by Hannes Smárason, CEO; Gnúpur fjárfestingafélag hf. (20.5%), Baugur Group (19.6%) , Icon, Materia Invest and Sólmon (11.9%). The shareholding can in some cases be in the name of Icelandic financial institutions because of forward contracts. More information on www.flgroup.is