Fidelity & Guaranty Life has announced their plans to sell their insurance company to Anbang Insurance, a Chinese firm, and the deal will close in the second quarter of 2016. The move comes at a time when both Anbang insurance and many other Chinese companies are increasing their market share in insurance and real estate in the U.S.
About Fidelity & Guaranty Life
Fidelity & Guaranty Life is a holding company previously based in Baltimore, but moved its headquarters to Des Moines, Iowa in 2013. It was at this time that the company made its shares public under the acronym FGL. The company currently has about 200 employees located in Des Moines, Lincoln, Nebraska and Baltimore, and the move is designed to help the company promote growth, according to Chris Littlefield, Fidelity & Guaranty Life’s President and CEO.
“Our expertise and ongoing commitment to independent agents and the indexed life and indexed annuity insurance markets, coupled with Anbang’s resources, will allow us to continue to grow our business and serve our customers,” Littlefield reported in a statement.
About Anbang Insurance
Anbang Insurance is based in Beijing and has only been in the business for approximately 10 years. The company has 30,000 employees and $114 billion in assets however. And much to the New York real estate market’s surprise, Anbang bought the famed Waldorf Astoria Hotel for $1.95 billion in October 2014.
Even with Anbang’s seemingly impressive stores of cash, they do not hold a heavy share of their domestic insurance market in China. They account for only 3.6% of the market, with Ping An holding 14% and China Life, a state-owned agency, accounting for 25% of the market. Still, they are experiencing enough success to move into the U.S. insurance and real estate field.
Anbang Insurance and Fidelity & Guaranty Life have agreed to a $1.57 billion deal which is set to take place in mid 2016. While there are no antitrust laws that the companies must be concerned with, individual state regulators must clear the deal. Anbang is paying $26.80 per share.
Fidelity & Guaranty Life’s holding company is HRG Group, and they have approved the deal. So after the details are finalized, Anbang will have a major market share in fixed-indexed annuity products in the U.S.
China’s Reach into U.S. Markets
This is just one of many recent moves by Chinese companies to claim a stake in the U.S. insurance market. White Mountains Insurance reached a deal with China Minsheng Investment Core Ltd over their Sirius International Insurance Group Ltd, selling it to the Chinese company for $2.24 billion.
The Chinese have also made strides towards acquiring many New York real estate landmarks, with JP Morgan Chase selling 1 Manhattan Plaza to Fosun International, and a group of investors which included Soho China co-founder Zhang Xin bought a 40% stake in the General Motors Building for $1.4 billion.
Chinese companies have not restricted their reach to the U.S., but have also made strides in European markets as well, with China Life purchasing a London skyscraper for $1.4 billion and Ping An purchasing Lloyd’s of London headquarters for $388 million.