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Fidelity National's Unit to Divest F&G Re to Aspida Holdings

Zacks Equity Research
·3 mins read

Fidelity National Financial Inc.’s FNF unit F&G has agreed to divest F&G Reinsurance Ltd (F&G Re) to Aspida Holdings Ltd. (Aspida), an indirect subsidiary of Ares Management Corporation. The transaction, pending approvals, is expected to be completed in the fourth quarter of 2020.

F&G, a part of Fidelity National family of companies, is a leading provider of annuities and life insurance. F&G Re is a Bermuda-based subsidiary of F&G that provides reinsurance solutions to third-party life and annuity companies. It had $2 billion in invested assets as of Jun 30, 2020.

The proceeds from the divestiture will be deployed for general corporate purposes, including funding growth opportunities at F&G. The divestiture is in sync with F&G's strategy to intensify focus on its core retail franchise and expand presence in the bank and broker dealer channel. However, this divestiture will have no material impact on Fidelity National’s results.

Concurrently, F&G and Aspida (via F&G Re) will enter into a flow reinsurance agreement with respect to F&G's MYGA products on a coinsurance fund withheld basis.  This reinsurance agreement is expected to strengthen F&G's competitive position in new and existing channels.

Recently, American Financial Group AFG agreed to divest Lloyd’s-based insurer Neon, which has not been able to achieve American Financial’s profitability target.  This will mark American Financial’s exit from the Lloyd’s of London insurance market to intensify focus on other specialty property and casualty businesses, redeploy capital in business and growth opportunities that have potential to earn targeted returns on investment, improve earnings, and enhance long-term value for shareholders.

Shares of Fidelity National have lost 30.9% compared with its industry’s decrease of 10.9%. However, this Zacks Rank #1 (Strong Buy) leading title insurance and settlement services provider, boasting leading market share in the residential purchase, refinance, and commercial markets is well poised on prudent acquisitions, strategic investments, cost management and solid capital position.

Other Stocks to Consider

Some other top-ranked companies in the insurance industry are Donegal Group DGICA and Markel Corporation MKL, both sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Donegal Group delivered an earnings surprise of 134.62% in the last-reported quarter.

Markel came up with an earnings surprise of 57.01% in the last-reported quarter.

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Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report
 
Markel Corporation (MKL) : Free Stock Analysis Report
 
American Financial Group, Inc. (AFG) : Free Stock Analysis Report
 
Donegal Group, Inc. (DGICA) : Free Stock Analysis Report
 
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