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Annuity Issuer Makes Changes

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FGL Holdings — the parent of Fidelity & Guaranty Life — has replaced its chief executive officer and is organizing a major effort to cut costs.

Blackstone, the investment company that controls FGL, is still expressing optimism about the Des Moines, Iowa-based life insurance and annuity issuer’s future.

Bennett Goodman, chairman of the Blackstone Insurance Solutions unit, said in a statement about the changes that the changes represent an exciting opportunity for Fidelity & Guaranty.

(Related: FGL Set to Issue $550 Million in Notes)

“We are committed to the success of F&G,” Goodman said in the statement.

The History

A property-casualty insurer founded Fidelity & Guaranty Life in 1959.

Old Mutual P.L.C., a large insurer now based in the United Kingdom, acquired the company in 2001 and used it as a base for entering the U.S. indexed annuity market.

HRG Group Inc., a New York-based investment firm, acquired control over Fidelity & Guaranty Life in 2011.

An affiliate of Blackstone acquired control over FGL in November 2017.

(Related: Blackstone Makes Major Push for Life Insurers’ Assets)

FGL is a publicly traded company, with stock that trades on the New York Stock Exchange, under the symbol FG, but, in March, Blackstone still owned about 22% of FGL’s stock, according to an FGL proxy filing.

The CEO Change

Christopher Littlefield, FGL’s previous CEO, had been the head of FGL since 2014. Before that, Littlefield had spent years working as an executive at AmerUS and Aviva USA.

FGL’s new CEO, Christopher Blunt, was the CEO of the Blackstone Insurance Solutions unit in 2018.

Before Blunt joined Blackstone, he was president of the investments group at New York Life Insurance Company.

Blunt has a bachelor’s degree in history from the University of Michigan and a master’s degree in business from the University of Pennsylvania.

Chinh Chu, co-executive chairman of FGL, said in a statement that the company board thanks Littlefield for his leadership, and for his dedication to FGL.

“Mr. Littlefield has led F&G through an important transition, and we are well positioned for future growth,” Chu said.

FGL said in a document filed with the U.S. Securities and Exchange Commission that the separation agreement with Littlefield provides for a one-time $500,000 payment and the severance benefits provided under a prior employment agreement. The severance agreement appears to provide for about $4.3 million in severance pay, in exchange for compliance with employment agreement provisions.

Chu said the FGL board picked Blunt to be the new CEO because of his bold leadership style, operational expertise, experience with distribution and experience with coping with an evolving regulatory landscape.

Blunt said he believes FGL is well-positioned to help meet the growing demand for retirement income products.

Future Deals?

The FGL board noted that it has also hired Jonathan Bayer to fill a new position: head of corporate development and strategy.

Bayer will be in charge of mergers and acquisitions strategy, in overseeing the execution of acquisitions, FGL said.

Bayer previously was head of U.S. insurance investment banking at RBC Capital Markets.

Bayer helped the current owners of FGL with their acquisition of the company.

One company goal is to enter the independent broker-deal and bank channels, as well as to expand participation in the independent marketing organization (IMO) channel. The company now distributes products through 200 IMOs, and about 36,000 independent agents.

Cost Reductions

FGL has already conducted a strategic review.

The company said it expects the results of the review to lead to about $15 million in annualized expense savings once completed.

The company generated about $1.5 billion in revenue in 2017 and spent about $137 million on business acquisition and operating expenses.

The company said in its financial report for 2017 that it had 304 employees in 2017, with most based in Baltimore and Des Moines.

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