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September 09, 2013 at 11:41 AM
Fidelity & Guaranty’s Life recently announced $100-million IPO is a credit positive, according to an analysis by Moody’s Investors Service.
Ann G. Perry, vice president, senior credit officer for Moody’s, writes that the move is a credit positive because it establishes a public equity market for Fidelity & Guaranty Life (FGL) and lessens its capital dependence on the parent company, the Harbinger Group Inc., which acquired Fidelity & Guaranty Life Insurance Co. (FGLIC) from Old Mutual plc three years ago for $350 million.
Most of the proceeds are expected to go toward organic growth or to finance in-market acquisitions, which further confirms the credit positive grade, Perry writes. Access to the IPO cash, along with the bulk of the $300 million March debt issue by FGL subsidiary, Fidelity & Guaranty Life Holdings Inc., provides ample capital to support expansion and opportunistic acquisitions, she notes.
However, Perry points out that a portion will be used to pay a dividend to Harbinger, “which dampens the benefits of the equity offering.” Harbinger will retain a majority stake in FGL.
