Mass Mutual and Athene Partner To Make a $3 Billion Buyout Offer for American Equity Annuity
October 1st, 2020 American Equity Annuity President & CEO, Anant Bhalla, confirms they did receive an unsolicited and nonbinding proposal from Athene and MassMutual to acquire American Equity Annuity. “Our Board, in consultation with independent financial and legal advisors, is carefully reviewing the proposal to determine the best course of action for our company and shareholders, as well as our employees, policyholders and stakeholders,” wrote Anant Bhalla.
“As most of you know, we have begun to implement a new strategic plan, AEL 2.0, which is designed to drive exceptional performance across our business, create new opportunities for you (independent producers), and unlock additional shareholder value.”
Bhalla continues, “We are well positioned to capture significant growth opportunities presented by the increasing number of Americans who desire attractive fixed index annuity products offering principal protection and guaranteed lifetime income. We are confident our AEL 2.0 strategy will enable us to go to market with greater strength, urgency and savvy, doubling down on our business development efforts already well underway.”
As part of that plan, we recently announced an agreement in principle to create new reinsurance and asset management entities with leading global alternative investment firm Värde Partners and insurance solutions provider Agam Capital Management. The partnership would enable us to capture income from the management of insurance assets, and gives us access to differentiated asset origination to allow American Equity Annuity to offer a variety of new, attractive fixed index annuity products to customers.
Bhalla closes with, “While our Board reviews the acquisition proposal, we remain focused on executing our strategy and continuing to serve your needs. If you are asked about this news by your clients, you can assure them that it is business as usual and nothing has changed regarding the exceptional service we are dedicated to providing.”
Both Anant and Ron Grensteiner, American Equity Annuity President, singed the letter that was emailed out to the independent salesforce earlier today.
Anant Bhalla
President & Chief Executive Officer
American Equity Investment Life Holding Company
Ron Grensteiner |
American Equity Annuity States Terms of bid in a Press Release
At 9:09, October 1, 2020 American Equity Annuity issued a press release confirming that it received an unsolicited non-binding proposal from Athene Holding Ltd. (NYSE: ATH) with Massachusetts Mutual Life Insurance Company to acquire all outstanding common shares of American Equity Annuity for $36.00 per share in cash.
Consistent with its fiduciary responsibilities, American Equity Annuity’s Board of Directors is carefully reviewing the unsolicited proposal in consultation with financial and legal advisors to determine the course of action it believes is in the best interests of the Company and its shareholders and other stakeholders. American Equity shareholders need take no action at this time.
J.P. Morgan and Morgan Stanley are serving as financial advisors to American Equity Annuity and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel.
American Equity Annuity Receives Bid Valued Over $3 Billion
At $36 per share the bid amounts to a value greater than $3 Billion. American Equity has a current market value of about $2 billion, and its shares closed Wednesday at $21.99.
The proposed deal is a “bet that the small Iowa insurer’s retirement-income products will continue to be popular with conservative savers,” according to a Wall Street Journal report. Massachusetts Mutual Life Insurance Co. and Athene Holding Ltd., parent company of Athene USA in West Des Moines, offered American Equity $36 a share in cash on Sept. 8, according to a letter sent to American Equity CEO Anant Bhalla, the Journal reported. American Equity issued a press release this morning confirming the unsolicited offer. At that price, the bid would amount to a value of more than $3 billion. American Equity has a current market value of about $2 billion, and its shares closed Wednesday at $21.99.
According to a copy of that letter filed by American Equity Annuity with the Securities and Exchange Commission, the offer calls for Athene to acquire the holding company and assume all of American Equity Annuity’s debt and preferred obligations, while MassMutual would acquire and retain the insurance subsidiaries and all of the employees, distribution, brands and infrastructure of the company.
MassMutual would reinsure 80% of the existing balance sheets of the insurance subsidiaries to Athene and retain the remaining 20%.
American Equity Annuity Management Would Continue to Run Domestic Annuity Business Under Deal
Under MassMutual’s ownership, it is envisioned that the current American Equity Annuity management team will continue to run the business and further strengthen its leadership position in the domestic Fixed Index Annuity marketplace,” MassMutual’s and Athene’s leaders said in the letter.
In 2019, American Equity Annuity was fifth in U.S. Individual Fixed Index Annuity Sales. Allianz, Athene, AIG, and Nationwide are the only insurers who sold more according to the Secure Retirement Institute’s Annual Annuity Sales Survey.
| American Equity | Rating |
|---|---|
| 6000 Westown Pkwy, West Des Moines, IA 50266 | |
| A.M. Best Rating (15 possible ratings) | A- (4) |
| Fitch (21 possible ratings) | A- (7) |
| Standard & Poor's (Financial Strength, 20 Ratings) | A- (7) |
| Comdex (percentile of all rating companies) | 60 |
About American Equity Annuity Company
American Equity Investment Life Holding Company, through its wholly-owned subsidiaries, is a leading issuer of fixed index annuities through independent agents, banks and broker-dealers. American Equity Investment Life Holding Company, a New York Stock Exchange listed company (NYSE: AEL), is headquartered in West Des Moines, Iowa. For more information, please visit www.american-equity.com
Forward Looking Statements
This article and any oral related statements may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements may relate to strategic alternatives, future operations, strategies, financial results or other developments, and are subject to assumptions, risks and uncertainties.
Statements such as “guidance”, “expect”, “anticipate”, “believe”, “goal”, “objective”, “target”, “will”, “may”, “should”, “estimate”, “projects”, “outlook”, “potential”, “opportunity”, “position” or similar words, as well as specific projections of future events or results qualify as forward-looking statements. Factors that may cause our actual decisions or results to differ materially from those contemplated by these forward-looking statements can be found in the company’s Form 10-K and Form 10-Q filed with the Securities and Exchange Commission.
Forward-looking statements speak only as of the date the statement was made and the company undertakes no obligation to update such forward-looking statements. There can be no assurance that other factors not currently anticipated by the company will not materially adversely affect our results of operations. Investors are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf.
