Symetra first filed for an IPO in 2007, but pulled the deal
in October 2008 during the worst of the financial crisis.

This time, the Bellevue, Washington-based company has cut
its offering and made other tweaks — such as having Berkshire
and White Mountains Insurance Group Ltd <WTM.N> retain full
majority ownership.

Buffett’s ownership “will give this IPO credibility,” said
Scott Sweet, senior managing partner of research firm IPO
Boutique, although he added there was nothing to stop Buffett
from selling shares later in a secondary offering.

Buffett agreed to retain his stake in Verisk Analytics
Inc’s <VRSK.O> October IPO, which was seen as contributing to
that offering’s outstanding performance.

But the fact that Symetra has to show its support from
Buffett and White Mountains is telling, analysts said.

“Maybe it shows that the IPO market is not as robust as
people thought,” said Alan Rambaldini, an analyst with
investment research house Morningstar.

In the initial 2007 filings, both Berkshire and White
Mountains had planned to reduce their respective 26.3 percent
stakes in Symetra to 15.2 percent.

A MORE CONSERVATIVE OFFER

Symetra on Wednesday cut the maximum value of its offering
to $434.7 million from the $575 million it filed for in October
2009, in its second attempt at an IPO.

The Wednesday filing also showed Symetra cut the number of
shares and price range from its first IPO attempt in 2007.

At the midpoint of the price range, the new IPO is worth
about $351 million — 53.2 percent less than the original.

Without sweeteners, the company would have been a tough
sell, analysts said.

“The life insurance industry in the U.S. is not the
greatest of businesses right now,” said Justin Fuller, an
analyst with Midway Capital Research & Management who publishes
the Buffettologist.com blog.

Life insurers were badly hurt by investment losses during
the credit crisis and recently had to shore up capital.
Several, including Lincoln National Corp <LNC.N> and Hartford
Financial Services Group Inc <HIG.N> sought U.S. bailout
funds.

“Probably Symetra had to reduce their offering price
because the market just won’t bear that right now from a life
insurance company,” Fuller added.

He said the best performers in this capital-intensive
business are the biggest and that Symetra is tiny in comparison
to its publicly traded peers.

Symetra now has an estimated price-to-book value of 0.85,
in line with other valuations in the sector, but 43 percent
less than the 1.5 multiple it would have based on the midpoint
of the 2007 offering price, said IPOdesktop.com President
Francis Gaskins.

While insurance companies were hit hard by the recession,
their shares are showing signs of a recovery. The Dow Jones
U.S. Life Insurance index <.DJUSIL> has more than tripled since
March.

And IPO experts believe that underwriters are unlikely to
be overly aggressive in pricing the first few deals of the
year.

“If the first few deals come to market price and trade
really poorly then people are going to start questioning the
recovery and it might make more investors gun-shy to investing
in IPOs,” said Paul Bard, an analyst with Connecticut-based IPO
research firm Renaissance Capital. “Underwriters are
incentivized to make sure the first few deals that come to
market trade well.”

Symetra plans to list on the New York Stock Exchange under
the symbol “SYA.” It is expected to price during the week of
Jan. 18, according to underwriters.
(Reporting by Clare Baldwin and Lilla Zuill; editing by Andre
Grenon)

The company, which sells group health, retirement and life insurance, and employee benefits, said that the entire offering could net as much as $434.7 million and it expects it’s share of the proceeds to be about $208.3 million.

In October, the company had filed to raise as much as $575 million, but did not provide details of the offering.

Warren Buffett’s Berkshire Hathaway <BRKa.N>, which owns 26.3 percent of the company, is keeping all of its shares. A fund affiliated with investor J.C. Flowers, which currently owns 2.3 percent of the company, is selling all of its shares.

Buffett’s Berkshire Hathaway also kept all of its shares in the insurance company Verisk Analytics Inc’s <VRSK.O> October IPO. The company now trades about 38 percent above its IPO price.

Bellevue, Washington-based Symetra said in a regulatory filing with the U.S. Securities and Exchange Commission it expects its IPO to consist of 27 million shares for between $12 and $14 each. At the mid-point of that range, it would raise $351 million.

Symetra reported revenue of $1.3 billion in the nine months that ended September 30, up from $1.1 billion in the year-ago period. The company reported net income of $96.2 million, up from $27 million.

It said its adjusted book value as of Sept 30 was about $1.45 billion and it had total assets of $22.2 billion.

Symetra said in a regulatory filing that its board of directors has not yet determined how it will use proceeds from the offering, but said it would likely be for general corporate purposes, including contributions of capital to its insurance and other subsidiaries.

The company plans to list on the New York Stock Exchange under the symbol “SYA.”

Joint book-runners for the offering are Bank of America Merrill Lynch, JP Morgan, Goldman Sachs & Co and Barclays Capital. They have the option to purchase an additional 4.05 million shares.

This is the second time Symetra has tried to go public. The company filed for an IPO in 2007, but withdrew in 2008 due to poor market conditions.

(Reporting by Clare Baldwin and Lilla Zuill; Editing by Maureen Bavdek, Steve Orlofsky and Bernard Orr)

The measure, approved by the National Association of Insurance Commissioners (NAIC) at a quarterly meeting earlier this week, allows life and property-casualty insurers to count billions of dollars of deferred tax assets as regulatory capital through the end of next year.

Life insurers in particular had been clamoring for the change, eager for ways to boost capital after the sector was badly hit by the credit crisis. Regulators approved the measure 11 months after voting against it and other measures that would have provided capital relief.

“Insurance regulators have long understood the need for conservatism in insurer’s financial statements,” said NAIC President Roger Sevigny, in a statement. “This change recognizes that fact, but also recognizes that overconservatism can actually be detrimental to consumers.”

Insurers had already been given several other forms of capital relief, including an adjustment to capital charges for mortgage-backed securities.

Consumer groups such as the Center for Economic Justice and the Consumer Federation of America opposed the measure, saying it allows insurers to count more non-liquid assets as regulatory capital, potentially undermining consumers who bought insurance from these companies.

David Havens, an analyst with Hexagon Securities, said it would have been better if regulators had required companies to find more tangible ways to boost capital. “Simply changing regulations is not a way to strengthen capital for the industry, it is a little bit artificial,” he said.

The American Council of Life Insurers, which had recommended the change to regulators more than a year ago, calculated the benefit to life insurers alone could be $11 billion. The ACLI represents 340 U.S. life insurers including MetLife <MET.N>, Prudential Financial <PRU.N> and Hartford Financial <HIG.N>.

The accounting change also has the potential to be significant for companies that sell non-life insurance, including American International Group Inc <AIG.N> and Travelers Inc <TRV.N>, which provided comment to an NAIC group that drafted the statutory accounting change.

The NAIC-approved measure is more conservative than had been lobbied for by the ACLI, and contains certain limitations.

Howard Mills, a chief adviser within the insurance group at Deloitte and a former New York state insurance superintendent, said it was unlikely regulators would need to extend the capital relief beyond next year.

“They have done a good job of threading the needle,” said Mills, of the measure reached by the NAIC.

In order to count deferred tax assets toward the calculation of regulatory capital, insurers have to be more than likely to realize the tax benefit within three years, and it is limited to 15 percent of surplus.

“With this improvement, insurers can have greater access to capital and credit, which is essential to serving current and future policyholders,” said the ACLI’s chief actuary, Paul Graham.

(Editing by Steve Orlofsky)

Vice Chairman Mark Grier, speaking at an annual investor conference, said the final price the company receives in the sale of its minority stake in Wachovia Securities to majority owner Wells Fargo & Co <WFC.N> was still being decided in an appraisal process.

The Newark, New Jersey-based insurer, in a regulatory filing earlier on Thursday, said it assumed proceeds would boost regulatory capital for subsidiary Prudential Insurance by an estimated $2 billion, and add about $4 billion in investable funds. The latter estimate reflects taxes to be paid.

Prudential had already emerged from the credit crisis stronger than some of its smaller peers, and the proceeds from this sale will only help bolster that position, said executives. “We expect to outperform peers meaningfully and consistently,” said Chief Executive John Strangfeld.

Prudential and Wachovia Corp, which has since been acquired by Wells Fargo, combined their retail brokerages in 2003, with Wachovia taking a 62 percent stake in the joint venture and Prudential taking the rest. In selling its stake, Prudential is exercising an option it received when Wachovia bought brokerage A.G. Edwards Inc.

Grier said that if the company was paid in Wells Fargo shares, it would sell the stock relatively quickly. “We do not intend to be long-term holders of Wells, if that is what we get,” he said.

Prudential said previously that it expected the sale to close around January 1, and result in after-tax proceeds of $3.7 billion, and a $1.7 billion after-tax gain. On Thursday, Grier said Wells has its own estimate of the value of the brokerage business, and the appraisal process is designed to reconcile the two.

Prudentials’s shares were up 40 cents at $48.29 on the New York Stock Exchange, while Wells Fargo’s stock was down 1.3 percent at $25.63.

U.S. life insurers’ stocks were badly battered during the height of the credit crisis, as large investment and annuities losses spooked investors, who questioned whether the companies had enough capital to ride out the storm. The companies’ stocks have rallied since March, as investors’ concerns eased. Prudential’s shares have risen more than four-fold over that period.

(Reporting by Lilla Zuill, editing by Gerald E. McCormick, Maureen Bavdek and Matthew Lewis)

The largest publicly traded U.S. life insurer said it expects full-year 2010 operating earnings to rise by about half to between $3.3 billion and $3.6 billion, or $4.00 to $4.40 a share.

The average Wall Street forecast is $4.11 a share, according to Thomson Reuters I/B/E/S.

MetLife shares rose about 1 percent, or 35 cents, to close at $35.68 on the New York Stock Exchange.

MetLife Chief Executive Robert Henrikson said at an annual investor conference the company sees revenue growing by up to 8 percent in 2010 as it lures customers away from weaker rivals.

“It is about a flight to MetLife,” said Henrikson. “It is a good story.”

Life insurers were particularly susceptible to the upheaval in credit markets in 2008 and early this year, which led to large losses on the sector’s holding of trillions of dollars in investments. But as markets have recovered, MetLife and its next biggest rival, Prudential Financial Inc <PRU.N>, have emerged stronger than some peers, helping each to win more business.

MetLife said it expects improved investment profit and lower expenses will also help its bottom line in 2010. The company met its target of $400 million in cost savings a year ahead of schedule and raised its forecast for savings in 2010 to $600 million.

While it expects “meaningful” earnings recovery in 2010, it does not expect to return immediately to the level of growth it notched up before the credit crisis.

“We are a long way from where the company can perform,” said Chief Financial Officer William Wheeler. He added that the company’s earnings performance would not be “back to normal” until 2011 or 2012.

The company forecast an operating return on equity in 2010 of 10 percent — significantly below the 15.2 percent operating ROE it posted in 2007, before the worst of the credit crisis.

For the fourth quarter, the New York-based insurer forecast operating earnings of 90 cents to 95 cents a share. Analysts’ average forecast is 91 cents, according to Thomson Reuters I/B/E/S.

Operating earnings exclude some investment losses and are the most common measure used by Wall Street analysts.

Meanwhile, Henrikson said MetLife is “wide open to really accretive” acquisitions, or deals that could significantly bolster growth. He declined to speak about specific deals.

In July, a source told Reuters MetLife was interested in buying Alico, a large life insurance unit owned by bailed out insurer American International Group Inc <AIG.N>.

Henrikson said MetLife would be able to afford the $14 billion price tag suggested by Citigroup analyst Colin Devine for Alico and added the company would be willing to pay a lot for a “transformational deal,” the clearest acknowledgment from MetLife yet that it may be a potential buyer.

Alico, which was founded in 1921, sells life insurance and retirement products to 19 million customers in 54 countries. About half its revenue is generated in Japan.

MetLife’s shares have more than tripled since hitting a 52-week low of $11.37 in March as investor fears about the capital position of U.S. life insurers eased.

(Reporting by Lilla Zuill and Elinor Comlay; editing by Derek Caney, John Wallace and Andre Grenon )

AIG confirmed the departure but declined to comment on it
further, or to say how quickly someone will be named to replace
Andrew Kaslow, who had been chief human resources officer since
2007 and a member of the senior executive committee.

A home number for Kaslow had been disconnected, and he
could not otherwise be reached.

The vacancy leaves a hole within AIG’s management ranks not
only at a time when it is sparring with the Obama
administration’s pay czar Kenneth Feinberg over executive
compensation, but as it faces coming up with a pay system to
strike a balance between rewarding top performing employees and
keeping federal overlords happy.

AIG, the recipient of up to $180 billion in taxpayer aid,
angered many Americans earlier this year when it paid
million-dollar retention bonuses — payments simply for
staying in their jobs — to executives at a financial products
unit that was responsible for its financial implosion.

Chief Executive Robert Benmosche, a former CEO at No. 1
U.S. life insurer MetLife <MET.N> who took the job just four
months ago, wants to honor bonus contracts already in force,
but thereafter wants all new bonuses to be based solely on
performance, said one person familiar with developments.

Benmosche already has at least one candidate in mind for
the chief human resources position, the person said, adding
that it was possible he would recruit a former colleague from
MetLife.

“He wants to have a strong person there (in that
position),” said the person. “He changed comp at MetLife and
wants to do the same here.”

At MetLife, Benmosche revamped performance management with
a forced ranking system that required managers to rate
individual performance on a numerical scale of 1-5, with the
biggest bonuses reserved for those who achieved the highest
rankings.

If an employee scored on the low end of the scale, he or
she either had to show improvement or leave the company,
according to a person working there at that time.

To institute the revamp at MetLife, Benmosche recruited
Lisa Weber, an HR professional he had also recruited to
PaineWebber when he worked at the brokerage firm prior to its
acquisition by UBS.

Weber, who implemented sweeping changes to how performance
was measured, is not being considered for AIG’s human resources
vacancy, said the person. Weber, most recently a president of
MetLife’s individual business, left the company in September
and is currently barred from working for a rival insurer. She
did not return a call seeking comment.

(Reporting by Lilla Zuill; Editing by Phil Berlowitz)
((lilla.zuill@thomsonreuters.com;+1 646 223 6281))

The settlement is a feather in the cap of AIG Chief Executive Robert Benmosche, as it frees up the company’s resources to deal with the more pressing matter of repaying taxpayers, which gave the company a $180 billion bailout to save it from collapse under soured mortgage bets last year.

Greenberg, who built AIG into the world’s largest insurer over nearly four decades, had been locked in a costly and complicated legal tussle with the company dating back to his unhappy departure from the firm more than four years ago.

Benmosche, in a statement, said the settlement “will remove a significant distraction and expense and allow AIG to better focus its efforts on paying back taxpayers.”

CEO since August, Benmosche first reached out to Greenberg when he was considering taking the job, leading the parties to agree to work together to settle their differences.

“I look forward to assisting AIG in trying to preserve and restore as much value as possible for all of AIG’s stakeholders,” said Greenberg, who now runs several private firms after his ouster from the insurer in 2005, amid an investigation by then New York attorney general Eliot Spitzer.

Separately, AIG said it finalized changes for salary and bonus to be paid to Chief Financial Officer David Herzog, and Kristian Moor, CEO of its global property-casualty unit.

Herzog could receive cash and stock of up to $4.5 million, and Moor up to $7.6 million. The executives’ compensation was reworked to comply with regulations imposed by Washington pay czar Kenneth Feinberg, who has oversight of pay at firms which got the biggest U.S. bailouts.

Under the deal with Greenberg, he will get back treasured possessions that remained behind at AIG when he departed, including a photograph of himself with company founder Cornelius Vander Starr and a Persian rug that once graced the entrance to the company’s boardroom at 70 Pine Street in downtown Manhattan.

American International Group Inc announced details of the settlement in a regulatory filing late on Wednesday, including to release each other from all claims, and a promise not to make disparaging public statements about each other.

AIG said it also agreed to reimburse Greenberg and other parties for “reasonable” legal expenses up to $150 million.

The pact covers Greenberg, companies he controls, and AIG’s former chief financial officer, Howard Smith.

(Reporting by Lilla Zuill; editing by Andre Grenon)

But the board does not plan to take any action with respect to
Benmosche when it meets next Tuesday, the source said.

The Wall Street Journal has reported that the recently
installed CEO had threatened to quit earlier in November, partly
because he does not have discretion over pay packages for top
executives.

But Benmosche said in a letter to employees last week that he
was “totally committed” to seeing the company through its
difficulties.

Benmosche has been frustrated with the extent of governmental
oversight of the bailed out insurer, and would rather focus on
improving its operations, the source said.

AIG, which has received up to $180 billion of federal aid,
including more than $80 billion in loans, is around 80
percent-owned by U.S. taxpayers.

AIG declined to comment. The source did not want to be
identified because the upcoming meeting is not public.

Benmosche, a former CEO of MetLife Inc <MET.N>, said in the
letter he was particularly concerned with the pay of the company’s
top 100 executives, which is under the purview of Kenneth
Feinberg, the U.S. government’s pay czar.

Feinberg has cut average compensation for the 25 best-paid
employees at companies that received multiple bailouts and is
setting guidelines for pay for the next 75.

For AIG in particular, Feinberg has vowed to limit bonuses at
the company’s financial products unit, whose massive payouts
earlier this year sparked huge outrage. AIG is on track to pay
$198 million in bonuses to Financial Products employees in March
2010.

Benmosche, a native New Yorker who prides himself on a
reputation for toughness, took an aggressive stance joining AIG on
Aug. 10.

During a closed-door staff meeting in Houston, Texas that
month, Benmosche sharply criticized New York Attorney General
Andrew Cuomo, who was looking into bonuses to employees in the
financial products division. Benmosche subsequently apologized to
Cuomo’s office for his comments.

In mid-August, just days after taking over the struggling
insurer, he left to oversee a grape harvest near his villa in the
Adriatic Croatian city of Dubrovnik.

AIG posted its second straight quarterly profit on Nov. 6,
helped by a recovery in the value of its investments.
[ID:nN06174086]

AIG’s shares closed down 50 cents, or 1.4 percent, at $35.66
on the New York Stock Exchange on Thursday.
(Reporting by Paritosh Bansal and Lilla Zuill; Editing by Phil
Berlowitz)
(For more M&A news and our DealZone blog, go to
www.reuters.com/deals)

Ambac shares soared 44 percent to $1.01 during the regular session on the New York Stock Exchange and were a penny higher in late trading after Standard & Poor’s said it could raise some ratings.

Ambac said statutory capital for Ambac Assurance Corp was $856 million. That is many times more than the minimum capital base of $2 million required of bond insurers by the insurance regulator for Wisconsin, where the company’s bond insurance unit is based.

Regulators can seize a company when capital — a surplus of assets over liabilities — sinks below regulatory minimums.

“Ambac fights on to live another day, another quarter and perhaps beyond,” Hexagon Securities analyst David Havens said after the disclosure.

Ambac said it benefited from several factors, including $311 million from reinsurance payments, and its ability to commute, or cancel, four asset-backed securities derivative contracts that had been worth more than $5 billion, for cash payments of $520 million.

The company also expected to receive $440 million in tax refunds as a result of new legislation. This should give AAC’s regulatory capital a boost in the fourth quarter, said Ambac.

Later on Wednesday, S&P said it lowered the counterparty and financial enhancement ratings on Ambac Assurance Corp to ‘SD’ (selective default) because it viewed the commutations as distressed exchanges. But the ratings firm added that the $520 million in payments was substantially less than the losses it expected and it expects to raise these ratings in the near future, most likely to the ‘CCC’ category.

Like larger rival MBIA Inc <MBI.N>, Ambac has struggled to write new business since it lost top-notch ratings last year and has continued to struggle with derivatives losses, including losses tied to repackaged residential mortgage debt.

Ambac, once the No. 2 U.S. bond insurer, warned on November 10 that bankruptcy could be an eventual possibility, based on projections that it could run out of liquidity by the second quarter of 2011.

After Ambac’s announcement, the cost to insure the company’s debt narrowed, although the rates show investors still believe there is significant risk.

Credit default swaps on Ambac Assurance fell around 6 percentage points to 73.5 percent the sum insured as an upfront cost, or $7.35 million to insure $10 million in debt for five years, plus annual payments of $500,000, according to Phoenix Partners Group.

(Reporting by Lilla Zuill and Karen Brettell; editing by Lisa Von Ahn, Tim Dobbyn and Andre Grenon)

Ambac shares soared 44 percent to $1.01 during the regular
session on the New York Stock Exchange and were a penny higher
in late trading after Standard & Poor’s said it could raise
some ratings.

Ambac said statutory capital for Ambac Assurance Corp was
$856 million. That is many times more than the minimum capital
base of $2 million required of bond insurers by the insurance
regulator for Wisconsin, where the company’s bond insurance
unit is based.

Regulators can seize a company when capital — a surplus of
assets over liabilities — sinks below regulatory minimums.

“Ambac fights on to live another day, another quarter and
perhaps beyond,” Hexagon Securities analyst David Havens said
after the disclosure.

Ambac said it benefited from several factors, including
$311 million from reinsurance payments, and its ability to
commute, or cancel, four asset-backed securities derivative
contracts that had been worth more than $5 billion, for cash
payments of $520 million.

The company also expected to receive $440 million in tax
refunds as a result of new legislation. This should give AAC’s
regulatory capital a boost in the fourth quarter, said Ambac.

Later on Wednesday, S&P said it lowered the counterparty
and financial enhancement ratings on Ambac Assurance Corp to
‘SD’ (selective default) because it viewed the commutations as
distressed exchanges. But the ratings firm added that the $520
million in payments was substantially less than the losses it
expected and it expects to raise these ratings in the near
future, most likely to the ‘CCC’ category.

Like larger rival MBIA Inc <MBI.N>, Ambac has struggled to
write new business since it lost top-notch ratings last year
and has continued to struggle with derivatives losses,
including losses tied to repackaged residential mortgage debt.

Ambac, once the No. 2 U.S. bond insurer, warned on Nov. 10
that bankruptcy could be an eventual possibility, based on
projections that it could run out of liquidity by the second
quarter of 2011.

After Ambac’s announcement, the cost to insure the
company’s debt narrowed, although the rates show investors
still believe there is significant risk.

Credit default swaps on Ambac Assurance fell around 6
percentage points to 73.5 percent the sum insured as an upfront
cost, or $7.35 million to insure $10 million in debt for five
years, plus annual payments of $500,000, according to Phoenix
Partners Group.
(Reporting by Lilla Zuill and Karen Brettell; editing by Lisa
Von Ahn, Tim Dobbyn and Andre Grenon)