Old Mutual, a South African financial services company which trades on the London Stock Exchange, announced that it had agreed to purchase Fidelity and Guaranty Life Insurance Co., a Baltimore-based subsidiary of The St. Paul Companies, for $635 million in cash and stock.
The move marks a strong debut in the American life and annuity market for Old Mutual, which also announced the launch of “Americom,” described as “a complementary US fixed annuity and life assurance operation with a powerful and distinctive distribution system,” by its recently acquired Kansas City-based subsidiary Unified Life.
“Americom will provide significant additional power to Old Mutual’s US life business by selling directly to independent agents,” said the announcement. It will begin operations in 44 states on May 1st.
St. Paul will receive shares of Old Mutual stock valued at $300 million, $335 million in cash, and another $40 million from the return of its capital in F&G. “The sale of F&G Life will allow us to redirect our capital to support core specialty-property businesses in which we have clear competitive advantages and to corporate initiatives that will enhance the value we provide to our shareholders,” stated St. Paul’s CEO Douglas W. Leatherdale.
Old Mutual plans to retain F&G’s Baltimore headquarters and its management team headed by CEO Harry Stout. Guy Barker, formerly of NatWest Life, heads Old Mutual’s U.S. life operations. “This twin entry into the world’s largest life assurance and retirement savings market further broadens Old Mutual’s international business, which will now provide over 27% of its global income,” the company stated.
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