American Equity has said it is going into a long-term partnership with multi-asset platform 26North.
A statement from the firm says that American Equity already holds a strategic investment in 26North.
However, the new partnership will see Anant Bhalla, chief executive officer and president of American Equity, join 26North’s board of directors.
In addition, Bermuda-based reinsurer AeBe ISA, which is affiliated with 26North, has reinsured approximately $4.3bn of GAAP reserves of American Equity fixed indexed annuity policies from 2008 and 2010. American Equity estimates that this will generate an initial capital release in excess of $250m and generate a positive ceding commission, thereby growing AEL’s revenue-generating reinsured liabilities.
Bhalla said: “This partnership with 26North is a further step in our AEL 2.0 strategy to deliver significant value to all shareholders. The strategy is aligned with policyholders through our unique go-to-market and investment management approaches and capital-light structure. We continue to refine a capital-efficient business model to deliver superior, sustained returns for our shareholders and further strengthen our robust balance sheet. This deal will enable greater capital flexibility for AEL as we benefit from 26North’s investment expertise to deliver on attractive opportunities across private asset classes. We are proud to add 26North to our outstanding investment partner ecosystem and further advance our transformation into a hybrid, diversified financial services firm.”
He added: “Our agreement with 26North complements the strategic partnerships we have struck to support our unique investment management strategy, with each transaction providing access to a specific asset sector. Partnering with world-class investment firms – Adams Street, Monroe Capital, Pretium and now 26North – allows all AEL shareholders to participate in asset management economics, which is fundamental to our AEL 2.0 strategy.”
This new partnership comes a few days after Brookfield Asset Management Reinsurance said it was trimming back its investment life state in American Equity, simultaneously resigning its board seat. That came after Brookfield in January that it was looking to increase its common stock ownership in American Equity.
In January, Brookfield Reinsurance owned approximately 9.85% of the company’s issued and outstanding common stock, which was purchased in accordance with the terms of its previously announced Investment Agreement with the company.
In accordance with the terms of the Investment Agreement, Brookfield Reinsurance said then that it would purchase additional shares to bring its total combined ownership to approximately 16% of Company common stock.
As a result, American Equity was looking to issue 6,775,000 shares of its common stock to Brookfield Reinsurance at $37.33 per share, the company’s adjusted book value as of September 30, 2021, within the next few days.
The company said at the beginning of the year that it would use its $736m outstanding share repurchase authorisation to offset the Brookfield Reinsurance issuance dilution and to return capital to shareholders.
The reinsurance transaction is effective as of October 1, 2022.
