Fidelity National Prepares to Spin Off Part of Annuity Unit
What You Need to Know
Fidelity National CEO Mike Nolan says his company’s share price doesn’t reflect how well F&G has been doing.
A new F&G stock would trade on the New York Stock Exchange.
Fidelity National will keep an 85% stake in F&G because F&G stands to benefit from rising interest rates, Nolan says.
Fidelity National Financial is preparing to give a 15% stake in its F&G Annuities & Life subsidiary — the unit that holds Fidelity & Guaranty Life Insurance Co. — to its shareholders.
Fidelity National is the Jacksonville, Florida-based title insurer that acquired F&G in June 2020.
F&G is a Des Moines, Iowa-based life and annuity issuer that has focused on selling nonvariable indexed annuities, multiyear guaranteed annuities and fixed indexed universal life insurance.
Mike Nolan, Fidelity National’s CEO, said in a comment, included in the partial spinoff announcement, that the F&G deal has worked out better than Fidelity National had expected, but that Fidelity National’s share price does not reflect how well F&G has been doing.
“We believe that the best way to unlock this value is to publicly list F&G through a dividend to our shareholders,” Nolan said.
The new F&G stock would trade on the New York Stock Exchange.
What It Means
If F&G has its own NYSE stock listing, it will show up on the stock information ticket windows at the bottom of the CNBC and Fox Business screens.
F&G will release its own separate earnings every quarter, and Chris Blunt, F&G’s CEO, will likely speak on conference calls the company holds to go over its performance with securities analysts every three months.
The proposed spinoff could lead securities analysts, investors and financial news organizations to focus a little more attention on annuities and retirement security every three months.
Deal Details
The Fidelity National board approved the proposed spinoff in March.
They intend to structure the spinoff as a taxable dividend and complete the distribution by Sept. 30.
Fidelity National would help keep F&G well capitalized by converting a $400 million intercompany loan into F&G stock before the F&G stock distribution takes place.
