Guggenheim Partners LLC, a Chicago-based financial services company, has reached an agreement to purchase Security Benefit Corporation, whose holdings include SGI|Security Global Investors and Rydex|SGI.
The acquisition melds three different firms serving three different segments of the financial services. Guggenheim's holdings include a giant multi-family office typically serving families with more than $25 million, Rydex SGI is an investment management firm specializing risk management-oriented ETFs catering to financial advisor and Security Benefit is an insurance company with a more traditional asset management arm.
Guggenheim Partners, whose legacy dates back to the Guggenheim dynasty, counts as one of its holdings multifamily office Guggenheim Investment Advisors. The transaction is expected to close in the late second quarter or early third quarter of 2010.
"Guggenheim Partners is committed to expanding its presence as a global diversified financial services firm that provides fresh perspectives and innovative solutions in recognition of the evolving landscape for financial products," said Todd Boehly, managing partner in the office of the CEO of Guggenheim Partners.
Under the agreement, Guggenheim and a group of investors, including shareholders of Guggenheim Partners, will acquire Security Benefit Corporation. Security Benefit's holdings include the following four primary businesses:
Security Financial Resources-a provider of retirement plan services for more than 135,000 accounts across the nation, primarily in the education marketplace.
Security Benefit Life-a provider of fixed and variable annuities to about 200,000 policyholders.
se2-an award-winning and nationally recognized provider of administrative services for the insurance and financial services industry with more than 700,000 policies and $30 billion in third-party assets under administration.
SGI|Security Global Investors and Rydex|SGI-an asset management company with about $22 billion in assets under management, offering institutional investors and financial intermediaries a broad spectrum of traditional and alternative investment strategies in separate accounts, mutual funds and ETFs.
Guggenheim Partners and Security Benefit began working together in June 2009 when Guggenheim became the investment advisor for Security Benefit's general account. Since then, Guggenheim has improved the quality of the portfolio while increasing investment income.
"Security Benefit has built an impressive portfolio of businesses that complement Guggenheim's expertise," Boehly said. "This transaction enables us to accelerate Security Benefit's growth given the marketplace's increasing demand for robust retirement programs and investment strategies. We believe that Guggenheim Partners brings resources and product development capabilities that will be advantageous to Security Benefit's current and future clients."
As part of the transaction, Howard R. Fricke, who served as Security Benefit's president and chief executive officer from 1988 to 2000 and chairman from 1996 to 2006, will serve as interim chairman of the board, president and chief executive officer effective immediately and will lead the organization through the transition until Guggenheim identifies a permanent chief executive officer and president for Security Benefit. Todd Boehly, who has spent the last eight years building out Guggenheim's credit investment management business, will serve as chairman following the close of the transaction.
Kris A. Robbins, who has been with Security Benefit for the past 12 years, most recently serving as chairman of the board, president and chief executive officer, today announced his retirement from the organization effective immediately. Upon the closing of the transaction, and following regulatory and policyholder approval for demutualization, Guggenheim Partners will control Security Benefit Corporation. It is also expected upon close, based on preliminary feedback from Standard & Poor's, that Security Benefit Life's credit ratings and outlook should improve, returning to investment grade over 3 time. Security Benefit retains its network of offices and will continue to occupy its Topekabased corporate headquarters and maintain its commitment to community stewardship and business leadership.
The Boards of the Security Funds and the Rydex Funds have approved the new investment advisory agreements between the funds and their investment advisers that will be effective after completion of the transaction, subject to approval by each fund's shareholders. The Guggenheim-led group will make an investment of approximately $400 million in Security Benefit. Additional terms of the transaction were not disclosed.