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Portfolio > Alternative Investments > Private Equity

Athene, MassMutual Offer $3 Billion for American Equity

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Buyers have come shopping for two annuity businesses in Iowa.

Athene Holding Ltd. and Massachusetts Mutual Life Insurance Company have teamed up to make a $3 billion cash acquisition offer for American Equity Investment Life Holding Company.

In a separate deal, Aspida — an insurance arm of Ares Management Corp., a money manager —  has agreed to acquire F&G Reinsurance Ltd. from FGL Holdings, for a price that was not disclosed.


  • An SEC filing related to the Athene/MassMutual offer for American Equity is available here.
  • A copy of the Ares F&G Re offer is available here.
  • An article about American Equity’s own financing deal proposal is available here.

Athene and MassMutual sent American Equity a confidential letter talking about why an insurer like American Equity might want to be acquired.

“As with the rest of the industry, American Equity is facing headwinds due to low interest rates and the potential for elevated credit losses,” Athene and MassMutual said in the letter, which was came into the hands of a reporter for the Wall Street Journal. “As a result, the stock price and operations will likely continue to face volatility and downward pressure.”

Athene filed a copy of the letter with the U.S. Securities and Exchange Commission, along with a copy of the Wall Street Journal article, after the article appeared.

Athene and MassMutual and American Equity

Athene is a Pembroke, Bermuda-based company has used cash from Apollo Global Management and other sources to buy Aviva USA, and to make big transactions with Voya, Lincoln and Jackson National.

MassMutual is a giant, Springfield, Massachusetts-based mutual life insurer. A mutual life insurer is one that’s owned by its policyholders.

American Equity is a publicly traded, West Des Moines, Iowa-based company that’s best known as an issuer of indexed annuities.

Athene and MassMutual made their offer for American Equity Sept. 8. The would-be buyers said that MassMutual wants to continue to operate American Equity as a stand-alone company.

“We have a strong desire to grow the American Equity franchise and support new business volumes through MassMutual’s anticipated investments in technology, and by expanding product offerings,” Athene and MassMutual said. “We believe we can further enhance American Equity’s competitiveness in the marketplace through leveraging MassMutual’s distinctive asset management and state-of-the-art policy administration capabilities.”

The deal will be be good for shareholders and American Equity customers, because Athene and MassMutual are both extremely well capitalized, and the transaction would be financed with existing capital resources, Athene and MassMutual said.

American Equity reacted earlier this week, without disclosing the Athene-MassMutual acquisition offer, by saying it had lined up an alternative arrangement: a deal to sell its reinsurance arm to a new, Bermuda-based reinsurer that would be set up by Värde  Partners of Minneapolis and Agam Capital Management of Teaneck, New Jersey.

That deal would leave American Equity in charge of its own destiny.

After the Wall Street Journal article appeared, American Equity put out a statement with the headline “American Equity Confirms Receipt of Unsolicited Non-Binding Acquisition Proposal.”

American Equity gave the statement the subtitle, “Shareholders Advised to Take No Action Pending Board Review.”

American Equity acknowledged that had received the Athene-MassMutual acquisition proposal.

“Consistent with its fiduciary responsibilities, American Equity’s board of directors is carefully reviewing the unsolicited proposal in consultation with financial and legal advisors to determine the course of action it believes is in the best interests of the company and its shareholders and other stakeholders,” American Equity said. “American Equity shareholders need take no action at this time.”

Analysts at S&P Global Ratings said in a comment that, under the deal, MassMutual would retain 20% of American Equity’s in-force business and reinsure 80% with Athene and the Athene Co-Invest Reinsurance Affiliate, or ACRA.

Athene would keep the holding company and assume all of AEL’s debt and preferred obligations, according to the S&P analysts.

The S&P analysts observed that American Equity works with 42 national marketing organizations, representing about 21,000 independent agents, for its current distribution. The company uses its Eagle Life subsidiary to reach broker-dealers and banks , the analysts say.

Aspida and F&G Re

Aspida Holdings, an arm of Ares Management, made an offer for F&G Reinsurance Ltd. Wednesday.

Fidelity National Financial, a title insurer, recently acquired F&G.

(Related: Annuity Issuer Says It Took Business Competitors Gave Up)

Ares announced that it has agreed to agreed for acquire F&G’s F&G Re unit for a price that was not disclosed.

F&G has about $2 billion in invested assets, according to Ares Management.

Ares said it manages $16 billion in assets for about 100 insurance company clients. It hopes to close on F&G Re by the end of the year, and to move the company to the Ares Re name.

— Read Alternative Capital Is Set to Double Down on the U.S. Life Insurance Sectoron ThinkAdvisor.

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