Goldman Wraps Up Global Atlantic - Analyst Blog
May 03 2013 - 1:13PM
Zacks
The Goldman Sachs Group, Inc. (GS) has
completed the private offering of shares of Global Atlantic
Financial Group, formerly known as the Goldman Sachs Reinsurance
Group. Goldman retains a minority stake of approximately 25% in the
company.
The step comes as the U.S. banks’ make efforts meet the regulators’
demands of maintaining a capital cushion. Goldman sold the
reinsurance through a private offering of shares to high net worth
clients and institutions.
Founded in 2004, Global Atlantic functions through 2 segments. One
is a U.S.-focused life and annuity reinsurance segment, including
the Commonwealth Annuity and Life Insurance Company. The other is a
global property and casualty reinsurance segment operating in
London and Bermuda under the brand name of Ariel Re.
Global Atlantic provides a diverse range of solutions to clients
for losses caused by natural disasters and other calamities. This
segment generated $1.08 billion in revenues in 2012, which marked a
23% rise.
In January, the U.S. banking major declared that it was considering
selling a major stake in Global Atlantic under pressure from
international regulators, who have made it mandatory for banks to
maintain higher capital. Even after its separation from Goldman,
the management team operating Global Atlantic will remain the
same.
Most of the major banks are currently struggling with the gloomy
macroeconomic factors and the eurozone crisis. Moreover, stricter
capital norms have worsened the situation. Therefore Goldman, like
many other global banks, are rightsizing its business to improve
profitability and do away with risky ventures.
Goldman currently carries a Zacks Rank #2 (Buy). While we prefer
Goldman, other banks worth considering include State Street
Corp. (STT), JPMorgan Chase & Co.
(JPM) and Fifth Third Bancorp (FITB). All these
stocks carry a Zacks Rank #2.
FIFTH THIRD BK (FITB): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
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