Brookfield Asset Management Jumps into American Equity Investment Life Deal

Posted on 10/19/2020

Brookfield Asset Management Inc. revealed a strategic partnership with American Equity Investment Life Holding (AEL), a retirement planning annuity provider. The partnership establishes Brookfield as a 19.9% cornerstone investor and reinsurance counterparty of AEL, supporting continued growth opportunities for the business. American Equity Investment Life specializes in the sale, through independent agents, banks, and broker dealers, of fixed index annuities. These investment products support individuals in preserving their retirement dollars and provide a secure, predictable income.

Key components of the deal:
1. Brookfield will acquire a 19.9% ownership interest in the common shares of AEL in two stages: an initial purchase of a 9.9% interest at $37.00 per share promptly following required regulatory approval, and a second purchase of an incremental 10.0% interest, at the greater value of US$ 37.00 per share or adjusted book value per share. The second equity investment is subject to finalization of certain reinsurance agreement terms, receipt of applicable regulatory approvals and other closing conditions and is expected to close in the first half of 2021. Brookfield will receive one seat on American Equity’s Board of Directors following the initial equity investment.

2. A reinsurance transaction through which Brookfield’s reinsurance and annuity subsidiary, Brookfield Asset Management Partners, will reinsure up to US$ 10 billion in annuity liabilities, including an initial US$ 5 billion of existing liabilities and up to an incremental US$ 5 billion of future business when written.

3. AEL will receive unique access to Brookfield’s attractive alternative asset strategies, which positions AEL to generate sustained returns in a low interest rate environment.

With this signed deal, American Equity Investment Life is rejecting an unsolicited acquisition proposal from Athene Holding Ltd and Massachusetts Mutual Life Insurance Company (MassMutual).

September 2020

In late September, American Equity Investment Life formed a strategic partnership with Värde Partners and Agam Capital Management, LLC, an insurance solutions provider. Under the terms of the agreement in principle, Värde Partners agreed to form a Bermuda reinsurance company that would reinsure US$ 5 billion of American Equity fixed index annuity liabilities. American Equity and Värde will also jointly establish an asset management entity to provide insurance asset management services to the reinsurance company. American Equity is intended to have a significant minority interest in the new reinsurer and a 35% interest in the newly formed asset manager. According to the press release in September, “American Equity brings distribution, policyholder service and administration, product development and insurance specific asset management expertise. Värde brings alternative asset management capabilities and Agam brings differentiated risk management solutions.”

Agam is a New Jersey-based insurance solutions provider, founded by Abraham Katz and Chak Raghunathan, senior executives from Apollo Global Management and Aflac Inc.

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