James Belardi, chairman and chief executive officer of Athene Holding Ltd., right, stands on the floor the New York Stock Exchange (NYSE) during the initial public offering of the company's stock in New York, U.S., on Friday, Dec. 9, 2016. U.S. stocks were set for a record as oil powered above $51 a barrel on signs producers are following through with agreed production cuts. The dollar rose toward an 18-month high. Photographer: Michael Nagle/Bloomberg Jim Belardi, Athene’s CEO (Photo: Michael Nagle/Bloomberg)

Prudential PLC, the parent of Jackson National Life Insurance Company, has managed to overcome COVID-19, low interest rates and social turmoil and negotiate a giant annuity reinsurance deal with Athene Holding Ltd.

The deal involves about $27 billion in traditional fixed annuity and indexed annuity liabilities.

Jackson will get about $1.25 billion in ceding commissions from Athene.

Athene is investing $500 million in Jackson and getting a 9.9% voting interest in Jackson.

Resources

  • A link to a deal presentation is available here.
  • An article about Prudential PLC’s interest in making a Jackson deal is available here.

The deal should lead to a sharp increase in Jackson’s risk-based capital ratio, and give the company the capital it needs to grow, according to Michael Falcon, Jackson’s chief executive officer.

Falcon said, in a comment included in the deal agreement announcement, that Athene and Jackson share the goal of “serving the growing population of American savers transitioning into and through retirement.”

Jim Belardi, Athene’s CEO, said in comments included in the deal announcement that Athene sees the deal as being mutually beneficial.

“This compelling transaction enables us to grow our gross invested assets by approximately 20% with predictable liabilities we know well,” Belardi said.

The reinsurance transaction is effective from June 1, 2020.

The companies expect Athene’s investment in Jackson to close in July.

The Players

Athene is a Pembroke, Bermuda-based life and annuity reinsurer.

Jackson is a Lansing, Michigan-based life insurer that is one of the top players in the U.S. annuity market.

Prudential PLC is a London-based insurer, with operations all over the world, that has no connection with Prudential Financial Inc. of Newark, New Jersey.

Prudential has been saying for months that it wanted to make a deal that would increase Jackson’s capital levels.

Deals Details

Under the terms of the Athene reinsurance agreement, Jackson will continue to administer and service the annuity contracts involved in the deal, the companies say.

Jackson will also sell both fixed and variable annuities.

Jackson “plans to introduce new products and continue expanding its distribution network,’ the Jackson says.

Correction: An earlier version of this article described the ceding commission flow incorrectly. Athene is paying the ceding commissions to Jackson.

— Read Athene Has Big Fish on the Line, on ThinkAdvisor.

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