Prosperity Drops Effort to Acquire Annuity Issuer
The Elliott Investment Management-backed firm says American Equity refused to engage.
An insurer backed by Elliott Investment Management has dropped efforts to acquire a well-known annuity issuer.
The company, Prosperity Group Holdings, says it has withdrawn a $45-per-share offer for American Equity Investment Life Holding Company because of American Equity’s lack of interest.
“Given American Equity’s refusal to engage and our desire to proceed only on a constructive basis, Prosperity has no interest in continuing to pursue our proposed transaction at this time,” the company said in an offer-withdrawal announcement.
What It Means
Some of the slowdown in life and annuity issuer dealmaking could be the result of rising interest rates and strong non-variable annuity sales giving the issuers the confidence to stay independent.
That could help stabilize the list of companies backing your clients’ annuities.
The Players
American Equity is a West Des Moines, Iowa-based life insurer that has focused on selling non-variable annuities.
It reported $1.2 billion in net income for 2022 on $1.4 billion in revenue and $74 billion in assets, compared with $430 million in net income on $3.7 billion in revenue and $78 billion in assets for 2021.
Prosperity is the New York-based company that oversees the business written by Shenandoah Life Insurance Company, SBLI USA Life Insurance Company and S.USA Life Insurance Company. It has about 300,000 policies in force.
Elliott, the investment firm that controls Prosperity, has a record of buying and reshaping what it sees as underperforming companies.
The Deal
Prosperity made an offer for American Equity in December 2022. It said the American Equity board rejected two requests to let Prosperity dealmakers see enough of American Equity’s records to fine-tune the offer.
American Equity executives talked to securities analysts on Friday, to go over earnings for the fourth quarter of 2022 and all of 2022.
The executives and analysts discussed a reinsurance agreement that has already freed up capital, and efforts to work with a bank to set up a new reinsurance “sidecar” arrangement that would let American Equity share more risk with outside investors.
The analysts did not ask the executives about the Prosperity offer.
American Equity’s headquarters in West Des Moines, Iowa. (Photo: American Equity)