In case you’ve missed it, there’s been a Hollywoodesque legal drama swirling around in the insurance world between two private equity (private equity) firms, Caldera Holdings Ltd., Apollo Global Management LLC, and one publicly traded insurance company.
Until now, the company has been unnamed, but, in my opinion, a recent court filing, and a persistent “no comment” statement, make it clear, that American Equity Life Insurance Company is the company.
The real story isn’t about Caldera and Apollo legal posturing, it’s how American Equity had no choice but to announce it was exploring a sale, even though selling wasn’t the company’s intent, and despite the unlikeliness the transaction would be completed.
American Equity reported more than a year ago that it was talking to a would-be buyer.
(Related: American Equity Says Deal Talks Have Ended)
The company said today that its deal negotiations with the other party have ended. American Equity still has not named the other party.
Before we jump into the American Equity deal story, here’s a brief overview of the Apollo vs. Caldera saga. Imran Siddiqui was the star protégé of Leon Black, the billionaire founder of Apollo, a $280 billion-dollar giant investment company. Imran was instrumental in helping Apollo partner and create the insurer Athene, which nets Apollo $400 million annually. Siddiqui was to Apollo, like LeBron James was to Cleveland (the first time). Just like with LeBron, the fairytale ends with Imran leaving to become the competition — Caldera.
In short, lawsuits have been filed in New York and Bermuda, with Apollo/Athene accusing Caldera of taking their “confidential and proprietary” information and methodologies used to acquire insurance assets, and stating that Caldera had simultaneously employed an Apollo partner to sabotage its bid for the unnamed company. While on the flip side, Caldera accuses Apollo of scaring off its investors and other professional relationships.
In other words, both companies think the other isn’t playing fair and both companies want the same insurance company.
Who’s the lucky gal they’re both fighting over?
The Lucky Gal
Until now, industry experts and those “familiar with the case” have suggested that the object of the companies’ interest is American Equity.
A redacted New York County arbitration award dated April 26, 2019, left just enough for readers of the document to infer that the company involved is American Equity. The award document states, “Athene was launched on the basis of a large reinsurance transaction with [blank], and [blank] was Athene’s first client.”
Bull’s-eye! Athene becomes licensed on June 29, 2009. Athene’s marketing piece, “Athene-Building a Leading Annuity Franchise,” lists American Equity as the company’s first transaction milestone, on July 1, 2009. And Athene’s website says Athene started operations after “entering into two flow reinsurance agreements.”
Likewise, an American Equity press release states that American Equity entered into “reinsurance arrangements with Athene” for two of American Equity’s “top selling fixed index annuities and… a multi-year rate guaranteed annuity” on July 1, 2009.
Is it coincidental that American Equity entered into a reinsurance agreement identical to Athene’s first transaction and at the exact time? Unlikely, but I guess possible.
How about this: Court documents state that Athene and the unnamed insurer were in close geographical proximity. American Equity and Athene are less than four miles apart.
So, that’s not enough? Add this: LawInsider.com’s database of legal contracts includes numerous Athene reinsurance contracts. The earliest one is dated July 1, 2009, with American Equity.
And last, this: I asked Athene to confirm that American Equity was involved in its first reinsurance transaction. After a number of interactions, Athene provided the following formal comment:
“Athene is not party to this litigation and therefore will not comment on the topic.”
Apparently, I didn’t clarify that I was asking a yes-or-no question about the company’s first reinsurance transaction, not for a comment on pending litigation.
However, in Bermuda, Athene is a party to this litigation. Of course, I thought to myself, this must have been an oversight. I emailed Athene, and again asked to verify Athene’s first reinsurance transaction (you can call me the Hannity of insurance reporting).