Insurer Symetra Financial Reduces its Valuation as a Signal that its IPO Will Now Go Forward

Warren Buffett’s Berkshire Hathaway to Keep its Shares and Not Be a Selling Shareholder

January 10, 2010 – The Bellevue, Washington based insurance company, Symetra Financial set the basic terms for its initial public offering (IPO) this week, lowering its valuation from the amount indicated in its Securities and Exchange Commission (SEC) filing made in October.  This decrease in valuation is an indication that the final pricing for the IPO will occur shortly. 

This is the second time Symetra has tried to proceed with an IPO. The company filed for an IPO in 2007, but withdrew the filing in 2008 stating poor market conditions.

Symetra sells retirement, life insurance, health insurance and employee benefit plans.  The company plans to list its shares on the New York Stock Exchange under the symbol “SYA.”

Symetra indicated in its SEC filing that it expects its IPO to consist of 27 million shares, at a price of between $12 and $14 per share.  At $13 per share, the IPO would raise $351 million, with the company’s share of the IPO proceeds approximating $208 million.  The company’s October SEC filing had indicated that it intended to raise as much as $575 million.  According to the filing, the IPO proceeds will be used for general corporate purposes, including contributions of capital to its insurance subsidiaries. 

In an indication that Warren Buffett believes that the company is undervalued, his Berkshire Hathaway, which owns over 26 percent of Symetra, is retaining its entire position.  But at the same time, investor J. C. Flowers, which owns 2.3 percent of the company, is selling its entire position.

Warren Buffet’s decision to retain Berkshire Hathaway’s entire position is a vote of confidence in the company’s future and its management.  Berkshire Hathaway also kept all of its shares in Verisk Analytic, an insurance company that went public through an IPO in October.  Verisk Analytic’s share price is now almost 40 percent above the IPO share price.

Symetra reported revenue of $1.3 billion for the nine month period ending September 30, 2009, an increase of $200 million over the same period of the prior year.  And, the company’s income increased as well.  For the nine month period, the company reported net income of $96.2 million, up from $27 million in the same period of the prior year.  As of September 30, 2009 the company’s SEC filing indicted that it had total assets of 2.2 billion.