The Goldman Sachs Group, Inc.
) 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 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.
JPMorgan Chase & Co.
Fifth Third Bancorp
). All these stocks carry a Zacks Rank #2.
FIFTH THIRD BK (FITB): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
STATE ST CORP (STT): Free Stock Analysis
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