Brookfield Reinsurance, a capital solutions business that provides insurance and reinsurance services to individuals and institutions, is set to acquire American Equity Investment Life Holding Company (AEL) for $4.3 billion, taking the firm’s deployed or committed capital since inception to more than $10 billion.
Brookfield first invested in AEL in 2020 via a strategic partnership which included a reinsurance transaction. The following year, the corporation officially launched its reinsurance entity, Brookfield Reinsurance, which in October of 2021 announced the completion of the aforementioned transaction.
In January 2022, it was revealed that Brookfield Re had increased its equity stake in AEL, and the company has now entered into a definitive agreement to acquire all of the outstanding shares of common stock of AEL it does not already own in a cash and stock transaction that values AEL at approximately $4.3 billion.
Brookfield Re first proposed taking full ownership of AEL in June of this year in a letter to the latter’s Board of Directors, which suggested an aggregate consideration of $55.00 per AEL share.
Today, Brookfield Re has confirmed that an agreement has been reached at this share price. Under the terms of the agreement, each AEL shareholder will receive $55.00 per AEL share, consisting of $38.85 in cash and 0.49707 of a Brookfield Asset Management (BAM) class A limited voting share having a value equal to $16.15 of the BAM shares on June 23rd, 2023, subject to adjustment in certain circumstances.
According to the announcement, the merger consideration of $55.00 per share represents a 35% premium to AEL’s undisturbed closing share price on June 23rd, 2023, and a 42% premium to AEL’s 90-day volume-weighted average share price as of such date.
The acquisition has been unanimously approved by both Brookfield Re’s and AEL’s boards of directors. Once completed, which is expected in the first-half of 2024, Brookfield Re intends to maintain AEL’s headquarters in Des Moines, Iowa, and envisions that growth in the AEL platform over time should increase net jobs in the region.
Additionally, Brookfield Re plans to maintain AEL’s focus on alternative asset strategies and expects BAM will manage a significant portion of AEL’s assets. This will provide AEL with access to BAM’s direct origination platforms and asset management capabilities while maintaining its current high-quality bias and investment grade focus.
Anant Bhalla, President and Chief Executive Officer (CEO) of AEL, commented on the transaction: “We are pleased to have reached this agreement with Brookfield Reinsurance and believe this transaction provides an excellent outcome for all AEL shareholders, policyholders and other stakeholders. The significant premium that will be delivered to shareholders as a result of this transaction is a testament to our strong performance and AEL’s successful transformation under the AEL 2.0 strategy into an asset light insurer and asset manager.
“The transaction represents an opportunity for AEL shareholders, through the BAM Shares, to remain invested in a market leading global alternative asset manager. I couldn’t be more excited about the potential opportunities for our people and benefits for policyholders as part of a preeminent global financial institution.”
“On behalf of the entire board, I am incredibly proud of AEL’s achievements and record of value creation for all stakeholders under the AEL 2.0 model. Thanks to Anant, the entire management team and our dedicated employees across our platform for their role and contributions in achieving this great outcome with Brookfield Reinsurance,” said David Mulcahy, Non-Executive Chairman of AEL’s board.
Sachin Shah, CEO of Brookfield Re, added: “This transaction represents an important step in the continued growth of our insurance business, further diversifying, and scaling, our insurance capabilities, and is a direct result of the partnership we have developed with AEL since our initial investment in 2020. With this transaction we have now deployed or committed over $10 billion of capital since our inception, bringing our total insurance assets to over $100 billion, and we remain on track with our growth targets for the business. Brookfield Reinsurance remains well capitalized and committed to meeting the needs of its policyholders and clients.”
“Given the complementary nature of AEL’s leading fixed annuity business to our existing platform, we expect to accelerate growth in collaboration with our distribution partners and employees while continuing to meet the needs of our policyholders and other stakeholders. Under its current leadership, AEL has been transformed into an innovative, asset light insurer that is positioned for growth, and we look forward to building on our successful partnership,” commented Jon Bayer, Managing Partner, Brookfield Re.
