Fidelity & Guaranty Lands Two Big Guns
October 14, 2014 by Linda Koco
The bench strength at annuity carrier Fidelity & Guaranty Life (FGL) has deepened. The company has named Christopher J. Littlefield as president and James M. Benson to the board of directors.
Littlefield is well-known in annuity circles. He was president and chief executive officer of big fixed indexed annuity (FIA) seller Aviva USA from 2009 to October 2013, when Athene Holding Corp. took over the carrier, renaming it Athene USA.
Benson is former president and chief executive officer of John Hancock, a division of Manulife Financial.
The moves represent additions to existing leadership, not replacements. For example, Littlefield is assuming the role of president from CEO Lee Launer, who up to now has been serving as both president and CEO of FGL. Now Littlefield assumes responsibility for several FGL operating units, including sales and distribution, and will report to Launer.
In Benson’s case, the company expanded its board to 10 members from nine, in order to bring him into the fold.
For the annuity industry, the changes represent more than routine appointments. They signal potentially greater competitive prowess on the part of FGL, more insurance expertise at the top, and possibly more insight into where this born-again company might be going.
Both executives have plenty of prior executive experience, including long stints in the life insurance and annuity sector.
For example, Littlefield served Aviva USA not only as president and CEO but also as chief operating officer. Before that, he served four years as executive vice president and general counsel and secretary at AmerUS Group, which became Aviva USA following its acquisition by Aviva plc in 2006. He also held management positions at Dial Corp., and as a corporate and securities attorney for Snell & Wilmer in Phoenix. He holds a doctorate degree in law.
Benson served on Manulife’s executive and management committees in addition to heading Hancock as president and CEO. Earlier, he was president of MetLife’s individual business enterprise; chairman, president and CEO of MetLife affiliates New England Financial and GenAmerica Financial; and president and COO of Equitable Companies and its Equitable Life business. In 2006, he received the John Newton Russell Memorial Award, the life insurance industry’s highest honor. Today, he is CEO of Benson Botsford, a Boston financial services investment company. He also is founder and chairman of World T.E.A.M. Sports, an organization that provides sports opportunities for people with disabilities.
Infusion of this seasoned talent comes at an opportune time, considering that the company has a lot going on. Within the last 11 months, for example, FGL:
- Completed its initial public offering (IPO) in December, raising $165.8 million. The carrier remains 80 percent owned by Harbinger Group (HGI) and operates as a public company.
- Held a ribbon cutting ceremony in January for its new headquarters in Des Moines, marking its departure from Baltimore.
- Debuted a new FIA in March. Called Performance Pro, the annuity offers several interest crediting options, including a five-year spread option that’s tied to a volatility controlled index. It also offers a 10 percent vesting premium bonus and a guaranteed minimum withdrawal benefit (GMWB) feature.
- Struck a three-year $150 million unsecured revolving credit facility agreement in August with seven participating banks as lenders.
- Reported substantial growth in indexed product sales.
- Launched another new FIA In September. Called Income and WealthBuilder, this one offers five interest crediting options and two surrender schedule options (7-year and 10-year).
- Also in September, the company’s board authorized repurchase of up to 500,000 shares of its common stock over the next 12 months.
Given their previous experiences, Littlefield and Benson will likely feel right at home when addressing such activities and developments.
Their presence at the company may help in another area as well. That is in strengthening the perception that FGL is run by insurance professionals and managed as an insurance company. This area became an issue in 2011, when a private equity subsidiary of HGI bought the company — then called OM Financial Life — from Old Mutual.
The buyer promptly transferred ownership to HGI, which is a diversified holding company, not a private equity firm, and the carrier took back its old name, Fidelity & Guaranty Life Insurance Co.
However, the carrier’s brief brush with being owned by the private equity subsidiary of HGI was enough to put it in the public spotlight. At the time, several private equity firms had either cut or proposed deals to buy life and annuity carriers. Critics were worried that the transactions could be risky, due to key differences in business models between private equity and insurance companies.
So HGI found itself in the position of explaining that it is not a private equity firm and that it manages the companies it owns for the long term.
FGL’s transfer to HGI’s ownership helped reinforce that message, since that meant the insurer was a unit of a holding company as are many other insurance companies. So did the IPO, which made FGL a public company and ushered in quarterly reporting and other disclosure activities required of public companies.
Now, with the new appointments, FGL may get some more distance from that old private equity association. This could happen if onlookers interpret their deep insurance expertise as a sign that they will use an insurance business model, not a private equity model, in guiding the company.
Launer, the CEO, made a point of mentioning the experience issue in the news announcement: “I’m extremely pleased to welcome Chris Littlefield and Jim Benson to FGL – two highly seasoned insurance executives, who further deepen the capabilities of both our leadership team and our board of directors as FGL enters its next phase of growth,” he said.
Not incidentally, Launer is himself a seasoned insurance executive. Before becoming president and CEO of FGL in 2011, he had held several executive leadership positions through 28 years with MetLife.