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American Life Makes an Annuity Reinsurance Deal

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What You Need to Know

  • The American Life-American Republic reinsurance deal involves MYGA contracts and fixed income annuities.
  • American Life’s parent, Midwest Holding, is comparing itself to Apollo.
  • American Enterprise, American Republic’s parent, announced a flurry of new hires about a year ago.

A company that hopes to build a big annuity business has a new reinsurance deal.

Midwest Holding Inc. says its American Life & Security Corp. subsidiary will be passing some of the annuity risk it assumes on to American Republic Insurance Co.

American Republic is a subsidiary of American Enterprise Group Inc.

American Republic has agreed to assume a 20% share of the risk associated with American Life’s multi-year guaranteed annuities and fixed income annuities, up to a limit of $100 million of premium, according to Midwest.

American Life can renew the deal every year, but the amount of risk passed on, or “quota share,” could change.

Mike Minnich, Midwest’s co-CEO, said in a comment in the deal announcement that = the Lincoln, Nebraska-based company hopes to form a long-term relationship with American Enterprise Group.

American Enterprise is based in Des Moines, Iowa.

A Midwest subsidiary, 1505 Capital, will manage the annuity assets covered by the agreement, Midwest says.

Midwest

Midwest is a public company, with stock that trades on Nasdaq with the stock symbol MDWT.

Company managers are telling investors that, in some ways, Midwest may be similar to, or even superior to, Apollo Global Management Inc., the asset manager behind Athene Holding Ltd., according to a presentation slidedeck.

Midwest managers say their company combines the ability to write annuities, asset management services, homegrown technology, and capital efficiency in one package.

The company posted a net loss of $1.6 million in the first quarter on $613,771 in revenue, compared with a net loss of $22 million on $24 million for the first quarter of 2020.

Company managers say they started to use American Life to build a modern annuity business from the ground up in 2018. American Life will create an “insurance as a service platform that takes a radically different approach,” managers say.

Because American Life passes on asset liability risk to other companies, “we are uniquely positioned to optimize a highly scalable and sustainable path, with minimal capital,” managers contend.

The company notes that its technology platform includes a portal that serves agents as well as policyholders.

Minnich, Midwest’s founder, chairman and co-CEO, has been a managing director at Swiss Re.

American Enterprise Group

American Enterprise is the parent of Great Western Insurance Company and of Medico as well as of American Republic.

The companies are licensed to do business in the District of Columbia and 49 states.

In 2020, American Enterprise announced the hiring of a commercial real estate investment manager and four regional sales managers.

American Enterprise recently invested in Everyday Life, a digital life insurance sales system company.

(Image: Shutterstock)