Athene Holdings, the Bermuda based life, annuity and run-off reinsurance specialist, is making a concerted move to target the European run-off market with a €2.2 billion pot of capital raised for opportunities in the region.
Athene said that a new Bermudian unit named AGER Bermuda Holding Ltd. (AGER) will be the holding company of Athene’s German operations, and has received subscriptions representing €2.2 billion from Athene and a number of global institutional investors after a private capital raise.
The capital is to be used to support capital and reinsurance transactions in the German and European guaranteed life insurance market, with a focus on buying run-off liabilities and completing reinsurance transactions in the region.
Athene’s capital raise is permanent equity and so does not include any financial leverage. The company itself committed up to €375 million in the offering and will take a large minority stake in AGER as a result.
Athene will be a long-term strategic partner for AGER and will be a preferred reinsurer for AGER’s liabilities, as well as providing other services.
“We see an unprecedented need in the German and broader European market for equity capital and reinsurance solutions to support run-off portfolios and closed block reinsurance transactions, particularly those with high guarantees,” commented Deepak Rajan, Executive Vice President at AGER.
“The closing of this capital commitment will allow us to complete transactions of significant scale across various European jurisdictions. We are delighted by the high quality nature of our investor base and believe this represents an industry solution to the issue of high cost legacy liabilities across Europe. Given the support of Athene, we believe that we are a highly credible counterparty for European insurers and provide them with the execution certainty they need,” he continued.
AGER will help insurers in Europe and Germany to free up capital, offer them management capacities and operating resources through the sale or reinsurance of legacy run-off portfolios or companies.
AGER, which is domiciled in Bermuda, will use as its principal operating subsidiary in Europe Athene Lebensversicherung AG, based in Germany. Athene Leben has been in run-off since 2010 and has €5 billion in invested assets as of 31st December 2016. Having been in run-off itself, the company has developed the experience and efficiencies critical to succeed as a run-off specialist, Athene believes.
Ina Kirchhof, CEO of Athene Leben, explained; “We are well-positioned to seize appropriate opportunities in the German and European run-off market with our core operating principles of policyholder protection as well as high quality asset and risk management. Policyholder satisfaction remains a top priority for us as we develop our company over the long term.”
Athene and its co-investors in this venture will look to put their capital to work as soon as possible, so it’s likely that deal-flow will follow this announcement as its AGER and Athene Leben units enter into run-off arrangements in Europe.