A company that has owned a big stake in Brighthouse Financial since 2018 is asking the annuity issuer to accept an acquisition offer from Aquarian Holdings, if Aquarian has made a good offer.
"The time has come to sell the company," David Einhorn, the president of Greenlight Capital, wrote in a public letter to Brighthouse directors.
If Aquarian makes a good case for a deal, Greenlight Capital might finance a deal, because "I firmly believe that Brighthouse can succeed as a private company," Einhorn wrote. "I am also impressed with the reported bidder's success in previous insurance company acquisitions."
Brighthouse "accounting is notably opaque, and the company has failed to articulate an investment rationale to attract investors," Einhorn said. "For nearly all of the company's history, its stock has been rated neutral or negative by most analysts. There is no reason to believe these things will change. In our view, the company would be better off selling at a significant control premium to private investors, who we believe would be best positioned to drive operating efficiencies and optimize the portfolio."
Greenlight owns 4.9% of the outstanding Brighthouse shares.
It paid to distribute Einhorn's letter through PR Newswire.
Brighthouse declined to comment on the letter. Representatives from Aquarian were not immediately available to comment.
What it means: A big public annuity issuer could go private.
That could reduce the flow of annuity market information going out to public investors through the company's quarterly earnings reports and conference calls with securities analysts.
But, if new owners improved the company's performance, it could offer new, more attractive life insurance and annuity products and have more cash it could use to provide marketing support.
Brighthouse: Brighthouse is a Charlotte, North Carolina-based company that was created to hold the individual life and annuity operations of MetLife.
MetLife decided to separate from those operations after the 2007-2009 financial crisis, when world regulators' concerns about the crisis and low interest rates led to pressure for big financial services companies to reduce their exposure to long-duration life and annuity benefits guarantees.
MetLife separated from Brighthouse in 2017.
Rumors that Brighthouse has been looking for a buyer have been circulating since at least February.
Aquarian: Aquarian bought Investors Heritage, a Frankfort, Kentucky-based life insurer, in 2018.
It later acquired Hudson Life and Annuity Co. and Somerset Re.
It has private credit management and other alternative asset management operations with $26 billion in assets under management.
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