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Hartford completes sale of UK variable annuity business

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The Hartford has completed the sale of its U.K. variable annuity (VA) business to Columbia Insurance Co., a Berkshire Hathaway company. A price of $285 million netted Columbia Hartford Life International Limited (HLIL).

The all-cash deal marks another step in the Hartford’s strategy to unload its life and variable annuity business in favor of property and casualty lines, group benefits and mutual funds. In 2012, the Hartford sold its VA line to Forethought.

At the time of closing, HLIL’s sole asset was its subsidiary, Hartford Life Limited of Dublin, which had $1.7 billion in assets under management. Between 2005 and 2009, Hartford Life Limited sold variable annuities in the U.K.

Fidelity & Guaranty Life (FGL) is now a public company. Today, the Des Moines, Iowa-based fixed indexed annuity provider priced its IPO at $17 per share, with 9,750,000 shares of common stock up for trading on the New York Stock Exchange under the ticker “FGL.”

In August, Fidelity & Guaranty’s parent company, Harbinger Group Inc. (HGI), filed with the SEC for the $100 million IPO.

Proceeds will be used to pay an unspecified dividend to HGI and for general corporate purposes. Harbinger is not a selling shareholder in the offering.

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, L.P., Sterne Agee, Cantor Fitzgerald & Co. and Dowling & Partners Securities LLC are acting as co-managers for the offering.

Fidelity & Guaranty has granted the underwriters a 30-day option to purchase up to an additional 1,462,500 shares of common stock.

FGL reported operating income in its insurance segment of $78.5 million in the third quarter versus an operating loss of $1.5 billion a year earlier. In Q3, FGL’s annuity sales reached $270.8 million, down from $468 million in the same quarter a year prior.

According to the SEC filing, fixed indexed annuities (FIAs) generated approximately 95 percent of the FGL’s total sales in fiscal year 2012. As of June 31, the company had roughly 700,000 policyholders. Its annuities are marketed through a network of 200 IMOs that represent some 19,000 independent agents.

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