American Equity Announces Strategic Partnership With Brookfield Asset Management to Accelerate AEL 2.0 Value-Creation Strategy
Brookfield to Reinsure Up to $10 Billion of American Equity Fixed Index Annuity Liabilities and Make 19.9% Equity Investment in American Equity At $37.00 Per Share for Initial Investment
American Equity Board Authorizes $500 Million Share Repurchase Program
Rejects Unsolicited, Non-Binding Acquisition Proposal from Athene and MassMutual
American Equity Investment Life Holding Company (NYSE:AEL) announced today that it has entered into a strategic partnership with Brookfield Asset Management Inc. for the reinsurance of $5 billion of existing liabilities and up to an incremental $5 billion of new sales of American Equity’s IncomeShield or similar fixed index annuity products.
American Equity will receive access to Brookfield investments in targeted asset classes as part of the strategic partnership. Brookfield’s position as a leading alternative asset manager with significant scale in attractive asset classes generating strong risk adjusted returns, will allow American Equity shareholders and policyholders the opportunity to benefit from exposure to differentiated alternative asset strategies with long-term, contractual cash flows and deploy significant capital into proprietary Brookfield investments.
As part of this strategic partnership, Brookfield will acquire a 19.9% ownership interest in the common shares of American Equity. The equity investment will take place in two stages: an initial purchase of a 9.9% equity interest at $37.00 per share promptly following Hart-Scott-Rodino approval, and a second purchase of an incremental 10.0% equity interest, at the greater value of $37.00 per share or adjusted book value per share (excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives). 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. In addition, Brookfield has agreed not to transfer any common shares purchased in the equity investment for a period of two years after the applicable closing of the investment, as well as to customary standstill restrictions until the five-year anniversary of the initial equity investment, in each case, subject to certain exceptions. Brookfield will also receive one seat on American Equity’s Board of Directors following the initial equity investment.
Anant Bhalla, President and Chief Executive Officer of American Equity, said: “This compelling strategic transaction, which we have been discussing with Brookfield since March, demonstrates the substantial shareholder value we are creating through execution of our AEL 2.0 strategy. By partnering with a world-class asset management and investment firm like Brookfield, we are accelerating the implementation of our strategy to be the leading, customer-focused annuity provider with …