FBL Financial Group has agreed to sell its subsidiary, EquiTrust Life Insurance Company, to controlled affiliates of Guggenheim Partners, LLC for a preliminary purchase price of USD440 million in an all-cash transaction.
EquiTrust Life sells fixed and indexed annuities and life insurance nationally through independent agents and marketing organisations. Guggenheim Partners, LLC is a diversified financial services firm with more than USD125 billion in assets under management. In addition, FBL Financial Group is announcing several capital management actions including redemption of USD175 million of public senior notes, redemption of USD50 million of affiliate senior notes and a stock repurchase authorisation of USD200 million.
“Over the past few years, we have executed several financial and business initiatives to strengthen our financial foundation and grow our business and profits. This transaction builds upon that work from a strategic perspective”
“The divestiture of EquiTrust Life will allow FBL Financial Group to increase focus on its very attractive Farm Bureau market, while reducing risk and increasing financial flexibility,” says James E Hohmann (pictured), Chief Executive Officer of FBL Financial Group. “Over the past 10-plus years, EquiTrust Life has grown into a significant presence in the independent distribution annuity marketplace making it attractive to potential acquirers who are looking to pursue that line of business. For FBL Financial Group, this presented an opportunity to narrow its strategic focus to its Farm Bureau niche.”
“Over the past few years, we have executed several financial and business initiatives to strengthen our financial foundation and grow our business and profits. This transaction builds upon that work from a strategic perspective,” Hohmann adds.
This transaction is subject to regulatory approval and other customary closing conditions, and the purchase price will be subject to closing and post-closing net worth adjustments. The transaction is currently expected to close on or about December 30, 2011. Bank of America Merrill Lynch is acting as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to FBL Financial Group.
“In conjunction with the consummation of this transaction, FBL Financial Group plans to take several actions to utilise excess capital, including redeeming USD175 million of public debt, redeeming USD50 million of affiliate debt and repurchasing stock pursuant to a USD200 million stock repurchase authorisation,” Hohmann says. “These capital management actions demonstrate FBL Financial Group’s commitment to generating shareholder value while at the same time narrowing its strategic focus.”
A portion of the sale proceeds will be used to redeem FBL Financial Group’s USD175 million of public debt, comprised of USD75 million of 5.85% Senior Notes due 2014 and USD100 million of 5.875% Senior Notes due 2017, in accordance with the terms of the notes. These notes are expected to be redeemed on or about January 30, 2012, assuming a year-end 2011 closing, at the make-whole redemption price. The aggregate redemption price to redeem both series of notes is currently estimated to be approximately USD207 million based on recent US treasury yields. The actual aggregate redemption price may be materially different as the calculations depend on the applicable US treasury yields on the third business day before the redemption date.
