Related Professionals
Situation
Federal Life Mutual Holding Company was a mutual holding company for its operating subsidiary, Federal Life Insurance Company. Federal Life Insurance Company is a Chicago-based life insurance company that commenced operations in 1899. Federal Life desired to expand its distribution system beyond its current markets to offer new products, including additional variable annuities and index annuities. Federal Life was a pioneer in the variable annuity market but needed capital to support a re-launch of this product.
Solution
Federal Life retained Griffin Financial Group to: (1) assist it with a mutual-to-stock conversion using Illinois’ subscription rights legislation, and (2) identify a partner that could act as a standby investor to purchase the stock not purchased by policyholders and management and provide strategic assistance, especially in developing new distribution channels.
Griffin identified Insurance Capital Group, LLC (“ICG”), an experienced insurance investor, as a strategic partner. Federal Life and ICG entered into a stock purchase agreement in which ICG agreed to purchase almost all the stock not purchased by policyholders and management. The stock purchase agreement also included certain standstill provisions pursuant to which ICG agreed, among other things, to continue current management for a period of five years and otherwise not seek operational control of Federal Life.
The transaction closed on December 11, 2018. Federal Life issued over $35 million of stock and received net proceeds, after expenses, of approximately $32 million. ICG purchased or arranged the purchase of over $27 million of the offering.
For more information on this transaction, contact Jeffrey P. Waldron, Co-Head of Griffin’s Financial Institutions Group, at 610.205.6028.
