Liberty Mutual to Seek $1.4 Billion in Insurance IPO

Liberty Mutual Agency Corp., a unit of Liberty Mutual Holding Co., will seek to raise as much as $1.41 billion to help repay debt in what would be the biggest U.S. initial public offering so far in 2010.

The second-largest writer of property and casualty insurance distributed through independent agencies in the U.S. plans to sell 64.3 million Class A shares at $18 to $20 each, Boston-based Liberty Mutual Agency said today in a filing with the U.S. Securities and Exchange Commission. Underwriters have the option to buy an additional 6.43 million shares if demand warrants, the filing showed.

The offering would surpass the $676 million raised in June by Houston-based Oasis Petroleum Inc. as this year’s biggest U.S. IPO. General Motors Co. of Detroit may seek $16 billion in a November initial sale, people familiar have said. At least three other U.S. companies filed or set terms today for IPOs seeking to raise a combined $893 million as the Standard & Poor’s 500 Index rose for the eighth time in 10 days.

“If the market continues to bounce a little bit more, I think we’ll see a ton of deals,” said Timothy Cunningham, who helps oversee about $57 billion at Thornburg Investment Management in Santa Fe, New Mexico. “There are a lot of companies out there that would like to raise money, a lot of investors that would like to cash out, and the bankers would like to get paid. If the market keeps up, we have an opportunity for all those things to come together.”

Economic Recovery

At least 43 companies have postponed or withdrawn initial sales this year as concern that the U.S. economic recovery is deteriorating sent the S&P 500 down as much as 16 percent from its 2010 high.

Liberty Mutual said in May that a stock market listing for its unit would boost its options to raise financing for growth. Following the offering, the parent will have about 98 percent of voting rights and 82 percent of the subsidiary’s equity.

Citigroup Inc. of New York and Charlotte, North Carolina- based Bank of America Corp. will lead the share sale.

Liberty Mutual Agency posted net income of $1 billion last year, according to the filing. Revenue was $10.9 billion, about a third of the parent company’s total.

Relative Value

At the IPO’s midpoint price of $19 and excluding the overallotment option, Liberty Mutual Agency would be valued at 6.8 times earnings, data compiled by Bloomberg show. That’s a 48 percent discount to the average ratio of 13.2 for U.S.-listed property and casualty insurers, the data show.

The initial sale would come after Symetra Financial Corp., the Bellevue, Washington-based insurer partly owned by Warren Buffett’s Berkshire Hathaway Inc., and Primerica Inc., the Duluth, Georgia-based distributor of term-life insurance, raised a combined $788 million in IPOs this year.

American International Group Inc. of New York also plans a Hong Kong IPO this year for its main Asia division, AIA Group Ltd., to help repay the U.S. government’s $182.3 billion rescue. Tokyo-based Dai-ichi Life Insurance Co. raised $11 billion in March in Japan’s biggest initial sale since 1998.

American Assets Trust Inc., a San Diego-based real estate investment trust that owns and operates retail and office properties in California and Hawaii, said today that it will sell as much as $500 million in shares. Bank of America, San Francisco-based Wells Fargo & Co. and Morgan Stanley of New York will lead the offering, an SEC filing showed.

CoreSite Realty Corp., a Denver-based company that owns and operates data centers in Los Angeles, Chicago and New York, will offer 16.9 million shares at $15 to $17, according to an SEC filing today. Citigroup, Bank of America and Toronto-based Royal Bank of Canada will lead the IPO.

Amyris Inc., an Emeryville, California-based biotechnology company, plans to sell 5.3 million shares at $18 to $20. Morgan Stanley and New York-based Goldman Sachs Group Inc. will arrange the IPO, today’s filing showed.

To contact the reporters on this story: Andrew Frye in New York at afrye@bloomberg.net; Lee Spears in New York at lspears3@bloomberg.net.

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