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U.S. retail annuity sales growth may have slowed in the third quarter, but Aquarian Capital's agreement to acquire Brighthouse Financial for $4.1 billion in cash shows that big investment firms are still excited about marrying annuity issuers with private credit vehicles, asset-backed financing platforms and other alternative investments.
Aquarian — a New York-based investment firm that entered the U.S life and annuity market in 2018 and now has $26 billion in assets under management — said the deal will be "funded with committed financing, without incremental debt financing" either at Aquarian or at Brighthouse.
Serving the U.S. retirement market "represents a significant and growing opportunity," according to Rudy Sahay, the founder and managing partner of Aquarian.
What it means: Retirement savers and their advisors could continue to have many new and improved annuity products to consider, both from existing and new players.
Brighthouse: MetLife created Brighthouse by putting its U.S. individual life and annuity operations in the company and separating from it in 2017. Brighthouse ranked 16th in U.S. individual annuity sales in the first half of the year, with $4.9 billion, according to LIMRA.
The company reported $453 million in net income for the third quarter on $1.8 billion in revenue, compared with $150 million in net income on $2 billion in revenue for the third quarter of 2024.
Brighthouse annuity sales increased to $2.7 billion, from $2.5 billion.
Industrywide U.S. individual annuity sales rose 4% between the third quarter of 2024 and the latest quarter, to $119 billion.
The other publicly held U.S. companies with annuity sales in the $4 billion to $8 billion range are Brookfield Re's American Equity, Fidelity National's F&G, KKR's Global Atlantic, Prudential Financial and Lincoln Financial.
Brighthouse ended up facing capital constraints, partly as a result of the types of life and annuity guarantees it had offered.
Rumors that Brighthouse was on the market had been circulating since February, and David Einhorn, the president of Greenlight Capital, wrote in a public letter in September that the Brighthouse board should seriously consider accepting an offer from Aquarian.
Aquarian: Aquarian started in the U.S. life and annuity market by acquiring Investors Heritage Life, and it later acquired Hudson Life and Annuity and Somerset Re.
Prudential announced in 2023 that it had picked Somerset Re to reinsure $12 billion in life insurance benefits.
Aquarian has said that it plans to keep Brighthouse Financial's current leadership team, including Eric Steigerwalt, the CEO, and to keep the company's offices and staff in Charlotte, North Carolina, at least for now.
"Aquarian Capital plans to invest in Brighthouse Financial's platform and distribution franchise, and we look forward to being an even stronger partner for you," Steigerwalt wrote in a letter sent to members of the Brighthouse distribution network.
Aquarian said it also wants to invest in product development and distribution efforts at Brighthouse, and to create a strategic relationship between the Brighthouse investment management team and Aquarian's investment management team.
Deals: Aquarian appears to be interested in making more deals.
The Brighthouse transaction will position Brighthouse "to pursue strategic growth opportunities," Aquarian said.
One question is whether this deal will wake up talk about other players' deals.
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