F&G Annuities & Life Announces $250 Million Investment From Fidelity National Financial

Rhea-AI Summary

F&G Annuities & Life, Inc. (NYSE: FG) announced the closing of a $250 million preferred stock investment from parent Fidelity National Financial, Inc. The investment will support the growth of its insurance company subsidiaries. The agreement includes the issuance of 5,000,000 shares of 6.875% Series A Mandatory Convertible Preferred Stock, with a liquidation preference of $50.00 per share. The conversion rate for each share of the Mandatory Convertible Preferred Stock will be no more than 1.1111 shares of common stock and no less than 0.9456 shares of common stock per share of Mandatory Convertible Preferred Stock, depending on the value of F&G's common stock.

Financial Analyst

The recent $250 million preferred stock investment by Fidelity National Financial, Inc. into F&G Annuities & Life, Inc. represents a significant capital infusion aimed at bolstering the insurance company's growth. The terms of the investment reveal a strategic use of Mandatory Convertible Preferred Stock, which carries a 6.875% dividend rate and is set to convert into common stock by 2027. This type of security benefits F&G by providing immediate capital while delaying dilution of common shareholders' equity, as conversion to common stock occurs at a later date.

The conversion rate being contingent on the value of F&G's common stock introduces a variable component to the deal, which can be seen as a vote of confidence by FNF in F&G's future stock performance. The liquidation preference of $50.00 per share sets a baseline for the downside protection for the investors. For stakeholders, the short-term benefits include the inflow of capital for growth, while the long-term implications involve potential dilution of common shares and the impact of the added dividend burden on financials.

Market Research Analyst

Examining the market dynamics, the investment from FNF into F&G is indicative of consolidation trends within the insurance industry, where companies are seeking to fortify their market positions through capital investments. The involvement of a Special Committee and consultation with independent financial and legal advisors underscores the deal's adherence to market terms and pricing, which is reassuring for market observers and investors.

However, the private placement nature of the deal, exempt from registration under the Securities Act, limits the liquidity and transferability of these securities. This could be seen as a move to secure a long-term investment without immediate pressure from the broader market, aligning with F&G's strategic growth plans. Stakeholders should note the implications of the conversion mechanism on share price and volatility as the Mandatory Conversion Date approaches.

Legal Expert

From a legal standpoint, the transaction's structure as a private placement under Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D is significant. It allows F&G to raise capital without the regulatory burdens of a public offering. The absence of registration means that the securities cannot be sold or offered to the public without meeting subsequent registration requirements or qualifying for an exemption at the time of sale.

For the company, this structure is advantageous as it expedites the capital raise and minimizes disclosure obligations. Investors, however, must be accredited and willing to bear the illiquidity risk associated with such securities. The role of independent advisors in negotiating the agreement is also critical in ensuring that the terms are fair and within market norms, which is a safeguard for both the company and the investors involved.

DES MOINES, Iowa, Jan. 16, 2024 /PRNewswire/ -- F&G Annuities & Life, Inc. (NYSE: FG) ("F&G or the Company") today announced the closing of a $250 million preferred stock investment from parent Fidelity National Financial, Inc. ("FNF").  F&G intends to use net proceeds from the investment to support the growth of its insurance company subsidiaries.

Under the terms of the agreement, FNF has agreed to invest $250 million in exchange for 5,000,000 shares of F&G's 6.875% Series A Mandatory Convertible Preferred Stock, par value $0.001 per share (the "Mandatory Convertible Preferred Stock"). Each share of Mandatory Convertible Preferred Stock will have a liquidation preference of $50.00 per share. Unless earlier converted at the option of the holder, each outstanding share of the Mandatory Convertible Preferred Stock will automatically convert into shares of common stock of F&G on January 15, 2027 (the "Mandatory Conversion Date"). Upon conversion on the Mandatory Conversion Date, the conversion rate for each share of the Mandatory Convertible Preferred Stock will be no more than 1.1111 shares of common stock and no less than 0.9456 shares of common stock per share of Mandatory Convertible Preferred Stock, depending on the value of F&G's common stock.

The offer and sale of the foregoing securities were made in a private placement pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act") and/or Rule 506(b) of Regulation D promulgated thereunder.  These securities have not been registered under the Securities Act or applicable state securities laws. Accordingly, neither the Mandatory Convertible Preferred Stock, nor the common stock into which the Mandatory Convertible Preferred Stock is convertible, may be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from registration requirements.

The agreement was negotiated pursuant to market terms and pricing by a Special Committee of F&G's Board of Directors comprised of independent members of the Board ("the Special Committee"), in consultation with Barclays serving as independent financial advisor, as well as Sullivan & Cromwell LLP serving as independent legal counsel. 

This press release is for informational purposes only and is not intended to and shall not constitute an offer to sell, or the solicitation of an offer to sell or the solicitation of an offer to buy, any securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.

About F&G

F&G Annuities and Life, Inc. is committed to helping Americans turn their aspirations into reality. F&G is a leading provider of insurance solutions serving retail annuity and life customers and institutional clients and is headquartered in Des Moines, Iowa. For more information, please visit fglife.com.   

Forward-Looking Statements and Risk Factors

This press release contains forward-looking statements that are subject to known and unknown risks and uncertainties, many of which are beyond our control. Some of the forward-looking statements can be identified by the use of terms such as "believes", "expects", "may", "will", "could", "seeks", "intends", "plans", "estimates", "anticipates" or other comparable terms. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: the potential impact of the consummation of the investment by FNF in F&G on relationships, including with employees, suppliers, customers and competitors; the use of proceeds from the investment by FNF; our ability to successfully realize the anticipated benefits of the investment; general economic conditions and other factors, including prevailing interest and unemployment rate levels and stock and credit market performance; natural disasters, public health crises, international tensions and conflicts, geopolitical events, terrorist acts, labor strikes, political crisis, accidents and other events; concentration in certain states for distribution of our products; the impact of interest rate fluctuations; equity market volatility or disruption; the impact of credit risk of our counterparties; changes in our assumptions and estimates regarding amortization of our deferred acquisition costs, deferred sales inducements and value of business acquired balances; regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) underwriting of insurance products and regulation of the sale, underwriting and pricing of products and minimum capitalization and statutory reserve requirements for insurance companies, or the ability of our insurance subsidiaries to make cash distributions to us; and other factors discussed in "Risk Factors" and other sections of F&G's Form 10-K and other filings with the Securities and Exchange Commission (SEC).

Contact:
Lisa Foxworthy-Parker
SVP of Investor & External Relations
Investor.relations@fglife.com
515.330.3307

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SOURCE F&G Annuities & Life, Inc.

FAQ

What is the purpose of the $250 million preferred stock investment announced by F&G?

The investment is intended to support the growth of its insurance company subsidiaries.

How many shares of the 6.875% Series A Mandatory Convertible Preferred Stock will be issued?

5,000,000 shares will be issued.

What is the liquidation preference per share of the Mandatory Convertible Preferred Stock?

$50.00 per share.

When will the Mandatory Convertible Preferred Stock automatically convert into shares of common stock of F&G?

On January 15, 2027, unless earlier converted at the option of the holder.

What is the range of the conversion rate for each share of the Mandatory Convertible Preferred Stock?

The conversion rate will be no more than 1.1111 shares of common stock and no less than 0.9456 shares of common stock per share of Mandatory Convertible Preferred Stock, depending on the value of F&G's common stock.

Under what conditions can the Mandatory Convertible Preferred Stock and the common stock into which it is convertible be offered or sold in the United States?

They may be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from registration requirements.