Fidelity & Guaranty Life (FGL)

[Enterprising Investor]

Anbang to Seek Extension for Buy of U.S. Life Insurer (10/28/16)

Regulatory issues holding up $1.57 billion pact for Fidelity & Guaranty Life

By Leslie Scism

Beijing-based Anbang Insurance Group Co. plans to extend again the deadline for obtaining regulatory approvals for its $1.57 billion deal to buy U.S. life insurer Fidelity & Guaranty Life, according to people familiar with the matter.

The Chinese insurer isn’t on track to complete insurance-department regulatory approvals in Iowa and New York by a Nov. 7 deadline, according to the top insurance regulator in Iowa, which is leading the review process, and other people.

“It is not possible” to have a ruling on the deal by early November because Anbang’s application is “still in review process,” and Iowa must provide 20 days’ notice for a public hearing once the state deems the file complete, said Iowa Insurance Commissioner Nick Gerhart. Fidelity & Guaranty is based in Des Moines.

A person familiar with the companies’ thinking said they have agreed to an extension, but details such as the new deadline are still being worked out.

The deal was announced in November 2015. Fidelity & Guaranty stock traded around the deal price of $26.80 a share until late May but stood at about $22 in trading Friday.

Anbang’s proposed acquisition of the insurer marked one of the first Chinese insurance-industry deals as the conglomerate and other Chinese firms are rapidly deploying money in the U.S. Chinese companies have made a record $199 billion in overseas acquisitions this year. Anbang Insurance has been one of China’s most aggressive investors abroad with its holdings including New York’s Waldorf Astoria.

Earlier this week, another Chinese firm, China Oceanwide Holdings Group Co., announced a $2.7 billion acquisition of Richmond, Va.-based Genworth Financial Inc., with an additional $1.1 billion cash injection. Numerous Wall Street analysts have cited Anbang’s inability to win regulatory approvals so far as boding poorly for the Genworth pact.

But Anbang’s situation is unique, according to people familiar with the matter. The approval process hit snags this spring when the insurer failed to provide detailed information being sought by New York’s Department of Financial Services, the department said at the time.

The details sought pertained to Anbang’s ownership structure, relationships among its shareholders, and the source of its funding for the deal, people familiar with the matter said.
At that point, Anbang withdrew its New York application and said it would refile later. But it hasn’t done so, people familiar with the matter said.

“We have the situation where they withdrew in New York,” Mr. Gerhart said. “Anbang needs both states to approve it.“

Fidelity & Guaranty said in regulatory filings earlier this year that the parties had obtained approvals from the Committee on Foreign Investment in the U.S. and the Vermont Department of Financial Regulation.

—Rick Carew contributed to this article.

http://www.wsj.com/articles/anbang-to-seek-extension-for-buy-of-u-s-life-insurer-1477672502