American Equity Investment Life Holding Company has rejected an acquisition offer from Athene Holding Ltd. and Massachusetts Mutual Life Insurance Company.
The Athene-MassMutual offer is “is opportunistic, significantly undervalues the company, and is not in the best interests of American Equity and its shareholders and other stakeholders,” according to a letter to Athene and MassMutual that was signed by John Matovina, who is American Equity’s chairman, and by Anant Bhalla, the company’s chief executive officer.
- Links to documents related to American Equity’s latest announcement, including a copy of the investment agreement, are available here.
- An article about the Athene-MassMutual offer for American Equity is available here.
American Equity announced Sunday that its board has decided to enter into a strategic partnership with Brookfield Asset Management, rather than to accept the Athene-MassMutual acquisition offer.
Athene and MassMutual have proposed a $3 billion cash offer for American Equity. The Athene-MassMutual deal would amount to a price of about $36 per American Equity share.
American Equity says Brookfield has offered to pay at least $37 per share in cash for a 19.9% stake in American Equity.
Brookfield would buy 9.9% of the company’s stock as soon as antitrust regulators approved that purchase.
Brookfield then would buy another 10% stake, by June 30, 2021, after getting regulatory approvals and completing other arrangements. The price for the 10% stake could be higher than $37 per share if American Equity does well,, American Equity says.
Brookfield would also provide reinsurance for up to $10 billion n American Equity indexed annuity benefits obligations.
American Equity is a publicly traded life insurer based in West Des Moines, Iowa. It’s best known as an issuer of non-variable indexed annuities.
The company reported a $253 million net loss for the third quarter on $920 million in revenue. It recorded a $1.2 billion drop in the fair value of embedded derivatives.
The company also reported $100 million in operating income.
American Equity recently announced a reinsurance agreement with Värde Partners and Agam Capital Management. Värde, a Minneapolis-based money manager, said it will form a Bermuda-based reinsurance company that will reinsure $5 billion of American Equity non-variable indexed annuity obligations. The companies said Agam will help with risk management.