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Fidelity & Guaranty Life Insurance Co. moving headquarters to Iowa

InsuranceFinanceSecuritiesU.S. Securities and Exchange CommissionInvestmentsBaltimore Development Corporation

Fidelity & Guaranty Life Insurance Co., a presence in Baltimore since its founding 54 years ago, will move its headquarters to Des Moines, Iowa — another disappointing loss of corporate clout for the city.

The life insurance and annuity company, which employs about 150 at its Fleet Street offices in Harbor East, said it will maintain a presence in Baltimore, but its future growth will occur in Iowa.

"We certainly like Baltimore and have a big operation here," said Paul Tyler, a Fidelity senior vice president. "But we are looking at our long-range growth plans and it made a lot of sense for us to build a presence in Iowa."

He added that Fidelity has no plans to reduce its Baltimore work force, but staffing levels here and in Lincoln, Neb., where Fidelity employs about 30 people, will shrink over time through attrition.

Many of Fidelity's competitors, such as Transamerica Life Insurance Co. and Principal Insurance Co., Tyler explained, are based in Iowa and moving there will allow Fidelity to operate under the same regulatory authority as the others.

Iowa also has a lower cost of living and a more business-friendly environment, he said. And, because of the insurance industry's large presence in Iowa, the state has a large pool of actuaries and financial professionals from which to hire.

Since 2011, Fidelity has been owned by Harbinger Group, a publicly traded investment company headed by disgraced hedge fund adviser Philip A. Falcone.

In August, Falcone and his advisory firm, Harbinger Capital Partners, agreed to pay more than $18 million as part of a settlement with the Securities and Exchange Commission. Falcone and the firm admitted to market manipulation and to Falcone's improperly borrowing $113.2 million from a Harbinger fund to pay his personal taxes. The SEC also banned Falcone from the securities industry for at least five years.

New York regulators subsequently barred Falcone from having direct or indirect control over the operations of Fidelity's New York subsidiary for seven years. The Maryland Insurance Administration stated in a September letter to the Iowa Insurance Division that it was reviewing any actions it might take, given Falcone's admissions.

Fidelity, which had had about 700,000 policyholders at the end of June, recently received approval from Maryland and Iowa regulators to move to the Midwest state.

The Iowa Insurance Division placed a few conditions on the insurer, said Tom Alger, a division spokesman. For instance, Falcone or employees of Harbinger Capital Partners cannot make investment decisions for Fidelity or serve as officers or directors of the company for at least five years, and then only with approval from the regulator.

The company is not relocating its headquarters because of any unhappiness with Maryland regulators, Tyler said.

While the headquarters is relocating, Fidelity CEO Lee Launer and chairman Phillip Gass live in Florida and New York, respectively, and won't be moving to Iowa, Tyler said. Fidelity expects to hire about 50 employees in Des Moines.

Fidelity was founded in 1959 and was a subsidiary of U.S. Fidelity and Guaranty Co. until 1998, when it was acquired by St. Paul Cos. of Minnesota. St. Paul, in turn, sold the Baltimore insurer in 2001 to Old Mutual, which changed the company's name. Old Mutual sold the company in 2011 for $350 million to Harbinger Group, which reinstated the Fidelity name.

In the past decade, the Baltimore region has seen a loss of corporate headquarters, often through acquisition. Those include Rouse Co., Sweetheart Cup Co., Constellation Energy, Arbitron Inc., and, soon, Sourcefire Inc., which recently agreed to be acquired by Cisco. Baltimore's largest banks are now based in other states.

Joanne Logan, spokeswoman for the Baltimore Development Corp., the city's development arm, said in a statement: "Baltimore is a strong magnet for economic growth, and while Fidelity & Guaranty Life Insurance has decided to move their headquarters to Des Moines, their core operations and current staff of 150 will remain in Baltimore City."

eileen.ambrose@baltsun.com

Copyright © 2014, The Baltimore Sun
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InsuranceFinanceSecuritiesU.S. Securities and Exchange CommissionInvestmentsBaltimore Development Corporation
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