National General Holdings Comes a Calling

National General Holdings (NGHC) has announced the redemption of the 2 outstanding issues of preferred stock. This call has been anticipated since the company was bought by Allstate–although this is quicker than I personally thought since they just closed the purchase late late week.

The company which is now owned by Allstate (ALL) has 3 issues of preferreds outstanding and 1 issue of baby bonds.

They will redeem the Series B 7.50% preferred (NGHCO), the Series A 7.50% preferred (NGHCP) and the 7.625% Subordinated Notes (NGHCZ) all on 2/3/2021.

They are not calling, at this time, the Series C 7.50% preferred (NGHCN) issue–they intend to delist the issue prior to a call in July (when they become redeemable).

The press release is here.

ken was right on this one, with LarryL right behind.

16 thoughts on “National General Holdings Comes a Calling”

  1. Given NGHCO ex-dividend date was 12/30/2020, and it’s getting called on 2/03/2021. Do you know if shareholders get any dividend between now and call date?

    Appreciate the help

    1. if you owned NGHCO or P or Z on or before 12/29 you will receive the dividend on 1/15 plus the accrued between 1/15 and 2/2 on 2/3.

      1. Let’s say you bought the stock after 12/30. So you miss the last dividend.
        But do preferred shares pay a divided, if they are getting called on 2/3/21 (that’s the last two months). Does that dividend get pro-rated?

        1. I believe the part dividend for the period between 1-15 (last pay date) and 2-4 (redemption) will go to whoever owns the stock at time of redemption (or the record date 2 days before redemption). Talking about 9 cents here.

          The XD date of 12-30 only determines who gets the 1-15 dividend.

  2. Well I was looking at the NGHCO on Sunday and several others as a place to stash some short term cash and get a better yield than a MMF.
    Seems I wasn’t the only one.
    But I did pickup 400 shares of BRG-PA on Monday. All I expect is to hold it to about Sept. until it gets all called away, but I will get a nice divy in the meantime and decent YTC

    1. Charles – I own BRG-A as well for essentially same reason, but based on BRG’s pattern the last 6 months, I’d be very surprised if BRG-A remains outstanding in toto till September….. have bot BRG-C as well with longer holding period expected.

    2. If one is buying Bluerock preferreds above $25, you might want to take a step back for a minute and re-evaluate. BRG-A has been callable since 10/21/20.

      A rising tide has certainly lifted all yield-oriented boats, but BRG is the most leveraged apartment REIT in REITland – nobody else is even close. $300M equity cap to go along with $2.2 Billion in debt (including $800 million of preferreds outstanding).

      This company has not covered its common/preferred dividends and cap-ex with free cash flow for years – if ever.

      Just be careful. I have seen this movie before when nearly all preferreds start trading to stratospheric levels. We all know what can happen next to this illiquid sector. There is almost no margin of safety in this sector today.

      Seems like a good time to remember the old investing adage:

      “More people have died reaching for yield than they have from the barrel of a gun.”

      1. Rob – BRG has already called approx 60% of BRG-A outstanding since it first became callable only 2 1/2 months ago and also will be required to increase the coupon to 10.25% if A was to remain outstanding beyond 10/21/22. On top of that, they are subject to a mandatory 200% asset coverage ratio test which would mandate call if broken, so I’m pretty comfortable owning as a short term vehicle with sufficient margins of error to make it through till a call date in the near future… At today’s price of 25.17, there’s no risk (but zero return) if called in entirety tomorrow under the 30 day notice requirement.. If they follow their pattern so far under callability, I would expect another call notice for all or partial on or about Jan 20 for call in late February.

  3. I hold the C. Can someone please explain what delisting means in practical terms? Will it still trade online? Will it show up on my Fidelity statement? I’m assuming it will continue to pay until it’s redeemed in July.

    1. You will still own it, all the rules regarding the prospectus still applies, but it will not be tradable on the exchange it is currently listed after it is delisted. You will still get your dividends until it is redeemed.

    2. If any of my other delistings are an indication, the dividends will keep coming but they will be posted a few days later that before the delisting. I.E., LTSK.

  4. Farewell NGHCZ – it was nice to know you.
    Add this call to the Taubman (TCO-J) call in progress, cash is starting to build.
    May not be a bad time to keep some dry powder.

    1. golfergonebad–seems like we have been chasing our tails around for a long time.

    2. Farewell to NGHCZ from me too, we’ve been together since your coming out in August of 2015.

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