* Symetra's 2nd IPO try reveals tough market -- analyst
* Berkshire, White Mountains to keep shares in IPO
* Symetra valuation now less compared with first attempt
By Clare Baldwin and Lilla Zuill
NEW YORK, Jan 8 U.S. life insurer Symetra's
latest attempt to go public shows how difficult the market
still is for initial public offerings, even with the cachet of
being partly owned by Warren Buffett's Berkshire Hathaway Inc
Symetra first filed for an IPO in 2007, but pulled the deal
in October 2008 during the worst of the financial crisis.
This time, the Bellevue, Washington-based company has cut
its offering and made other tweaks -- such as having Berkshire
and White Mountains Insurance Group Ltd (WTM.N) retain full
Buffett's ownership "will give this IPO credibility," said
Scott Sweet, senior managing partner of research firm IPO
Boutique, although he added there was nothing to stop Buffett
from selling shares later in a secondary offering.
Buffett agreed to retain his stake in Verisk Analytics
Inc's (VRSK.O) October IPO, which was seen as contributing to
that offering's outstanding performance.
But the fact that Symetra has to show its support from
Buffett and White Mountains is telling, analysts said.
"Maybe it shows that the IPO market is not as robust as
people thought," said Alan Rambaldini, an analyst with
investment research house Morningstar.
In the initial 2007 filings, both Berkshire and White
Mountains had planned to reduce their respective 26.3 percent
stakes in Symetra to 15.2 percent.
A MORE CONSERVATIVE OFFER
Symetra on Wednesday cut the maximum value of its offering
to $434.7 million from the $575 million it filed for in October
2009, in its second attempt at an IPO.
The Wednesday filing also showed Symetra cut the number of
shares and price range from its first IPO attempt in 2007.
At the midpoint of the price range, the new IPO is worth
about $351 million -- 53.2 percent less than the original.
Without sweeteners, the company would have been a tough
sell, analysts said.
"The life insurance industry in the U.S. is not the
greatest of businesses right now," said Justin Fuller, an
analyst with Midway Capital Research & Management who publishes
the Buffettologist.com blog.
Life insurers were badly hurt by investment losses during
the credit crisis and recently had to shore up capital.
Several, including Lincoln National Corp (LNC.N) and Hartford
Financial Services Group Inc (HIG.N) sought U.S. bailout
"Probably Symetra had to reduce their offering price
because the market just won't bear that right now from a life
insurance company," added Fuller.
He said the best performers in this capital-intensive
business are the biggest and that Symetra is tiny in comparison
to its publicly-traded peers.
Symetra now has an estimated price-to-book value of 0.85,
in line with other valuations in the sector, but 43 percent
less than the 1.5 multiple it would have based on the midpoint
of the 2007 offering price, said IPOdesktop.com President
While insurance companies were hit hard by the recession,
their shares are showing signs of a recovery. The Dow Jones
U.S. Life Insurance index .DJUSIL has more than tripled since
And IPO experts believe that underwriters are unlikely to
be overly aggressive in pricing the first few deals of the
"If the first few deals come to market price and trade
really poorly then people are going to start questioning the
recovery and it might make more investors gun-shy to investing
in IPOs," said Paul Bard, an analyst with Connecticut-based IPO
research firm Renaissance Capital. "Underwriters are
incentivized to make sure the first few deals that come to
market trade well."
Symetra plans to list on the New York Stock Exchange under
the symbol "SYA." It is expected to price during the week of
Jan. 18, according to underwriters.
(Reporting by Clare Baldwin and Lilla Zuill; editing by Andre