The acquisition of F&G will diversify the cash and income streams of Fidelity National Financial away from title insurance
Fidelity National Financial (FNF), a US title insurance company, has agreed to acquire FGL Holdings (F&G), a fixed indexed annuities and life insurance provider, for $12.5 per share.
The cash-cum-stock deal represents an equity value of around $2.7bn for F&G, which is domiciled in the Cayman Islands.
Currently, Fidelity National Financial owns a 7.9% stake in F&G and will purchase the remaining Series A preferred shares of the latter with a face value of around $321m as of 31 December 2019.
Fidelity National Financial CEO Raymond Quirk said: “Through our minority ownership position in F&G, we have come to know the business well and have developed great respect for Chris Blunt, F&G’s president and CEO.
“We believe FNF’s size, scale, and financial strength will offer significant advantages to Chris and the management team as they continue to lead F&G. We see incredible potential in working with the management team to invest in and grow F&G’s business on a national level.”
F&G is made up of three insurance companies, namely F&G Life Insurance, F&G Life Insurance Company of New York, and F&G Re.
F&G Life Insurance, which is based in Iowa, and F&G Life Insurance Company of New York, are annuity and life insurance companies, while F&G Re is a reinsurer based in Bermuda.
The acquisition helps Fidelity National Financial to move beyond title insurance
Through the acquisition, Fidelity National Financial said that it will foray into an industry having strong secular growth tailwinds which it expects to perform well in economic environments that are difficult for title insurance.
The company said that the deal also diversifies cash and income streams away from title insurance.
According to the terms of the transaction, shareholders of F&G have the option to sell each of their shares in return of either 100% cash or 0.2558 of Fidelity National Financial shares. Subject to an election and proration mechanism, the total consideration to be paid to F&G’s ordinary shares will comprise nearly 60% cash and 40% Fidelity National Financial’s common stock.
Post-merger, F&G’s shareholders will own about 7% in the enlarged Fidelity National Financial. F&G will become a subsidiary of the title insurance company, and is expected to remain headquartered in Des Moines, Iowa.
Chris Blunt said: “This agreement, which offers immediate value to F&G shareholders and compelling benefits to our stakeholders, will provide a meaningful platform for our business as we continue to build the F&G of the future.
“We are excited to enter into the next phase of growth with FNF and are confident that by combining our complementary businesses, we will be better positioned to carry out our mission of helping customers turn their aspirations into reality.”
The transaction is expected to be completed either in the second quarter or the third quarter of this year, subject to receipt of regulatory approvals, F&G’s shareholders’ approval, and other customary closing conditions.
