Des Moines’ newest insurer hits a high note with opening offering
December 16, 2013 by Victor Epstein
Shares of the Fidelity & Guaranty Life Insurance Co., Des Moines’ newest insurer, rose $1.86 each, or 11 percent, on their first day of trading as a publicly traded company.
The stock, which trades under the FGL ticker, closed at $18.86 a share after opening the day at $17 on the New York Stock Exchange.
Fidelity & Guaranty Life moved its headquarters from Baltimore last month.
The company priced an initial public offering of 9.75 million shares Thursday at $17 each.
The offering was initially valued at $165.8 million.
“It’s a pleasure to see Wall Street give us such a warm reception,” said Lee Launder, Fidelity & Guaranty Life’s chief executive officer. “We’re proud to take our company public today. We are committed to our core products, markets, distribution and policyholders.”
Underwriters have an option to purchase another 1.46 million common shares over the next 30 days. They’re the investment banks that serve as intermediaries between the company doing the offering and investors.
Fidelity & Guaranty Life is a mid-sized annuities and life insurance company. It has a temporary location in the Hub Tower and has signed a lease for permanent office space on the 14th floor of Two Ruan Center at 601 Locust St., according to corporate spokesman Paul Tyler. It will move into the new space Jan. 1 and hold a ribbon-cutting ceremony Jan. 9.
Fidelity & Guaranty Life expects to employ 50 people locally within three years and has already hired three employees here. They’re led by former Aviva USA actuary Mike Spurbeck, who is now a Fidelity vice president.
Fidelity & Guaranty Life had 180 employees in November, with 150 of those in Baltimore and 30 in Lincoln, Neb.
“We’re hiring,” Tyler said Friday.
Fidelity & Guaranty Life reported $1.35 billion in revenue during the 12 months ended Sept. 30, earnings of $348 million, and total assets of $22.4 billion.
Fidelity & Guaranty Life’s parent company is the New York City-based Harbinger Capital Partners hedge fund, which is controlled by financier Phil Falcone. He was banned from the hedge fund industry for five years under a deal with federal regulators in August after admitting to improperly borrowing more than $100 million from the fund and giving preferential treatment to some clients.
Falcone, who is still listed as Fidelity & Guaranty Life’s “ultimate controlling person” on the offering prospectus, was also banned from serving as a Fidelity & Guaranty Life officer or director for seven years by the New York State insurance regulator.
Credit Suisse, J.P. Morgan and Jefferies are serving as lead joint book-running managers and as representatives of the underwriters for the offering. Macquarie Capital and RBC Capital Markets are acting as book-running managers. Nomura, Sandler O’Neill + Partners, Sterne Agee, Cantor Fitzgerald & Co. and Dowling & Partners Securities LLC are acting as co-managers, according to Fidelity & Guaranty Life.
Des Moines-based Fidelity & Guaranty Life serves as the operating company for a Delaware-based holding company called Fidelity & Guaranty Life. The latter is technically the company making the initial public offering and trading under the FGL ticker, according to Tyler.
