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Title Insurer Says F&G Deal Will Make It Stronger

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Executives at Fidelity National Financial Inc., a big title insurer, say they’re eager to complete the company’s $2.7 billion acquisition of Fidelity & Guaranty Life Insurance Company.

Fidelity National is a Jacksonville, Florida-based company that reported $8.5 billion in revenue in 2019.

F&G is an annuity issuer that generated $2.1 billion in revenue in 2019. The company is based in George Town, in the Cayman Islands. It has its main operating offices in Des Moines, Iowa.

Fidelity National announced plans to acquire F&G about a month ago.

Fidelity National executives talked about the deal Thursday, during a conference call the company held to go after first quarter earnings with securities analysts.

Resources

  • A recording of Fidelity National’s first quarter earnings call is available here.
  • An article about the Fidelity National-F&G deal is available here.

Fidelity National reported a $61 million net loss for the quarter on $1.7 billion in revenue, compared with $206 million in net income on $1.7 billion in revenue for the first quarter of 2019.

Bill Foley, Fidelity National’s chairman, said during the analyst call that Fidelity National sees the F&G deal as a way to increase 2020 earnings per share by about 10%, and to increase overall earnings stability.

The deal should also help Fidelity National do better at times when higher rates hurt the title insurance sale, Foley said.

F&G already has “strong growth tailwinds,” and those tailwinds “will be enhanced by FNF’s strong balance sheet and cross-sell opportunities,” Foley said.

Fidelity National has a large amount of cash on hand, a large amount of borrowing capacity in a credit facility, and a new, $1 billion term loan, Foley said.

Those resources will provide ample capacity for Fidelity National to pay for F&G, while giving the company the liquidity and flexibility to operate in the current market environment, Foley said.

Foley said Fidelity National is waiting for approval for the F&G deal from regulators in New York state and Iowa, and from F&G shareholders.

The company hopes to complete by the end of the second quarter of the year, or early in the third quarter, Foley said.

— Read Publicly Traded Life and Annuity Issuers Prepare to Talk About COVID-19 With Investorson ThinkAdvisor.

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