Global investment firm KKR & Co. Inc has announced an agreement to acquire all outstanding shares of life and annuity re/insurer Global Atlantic Financial Group for $4.4 billion.
Set to complete in early 2021, the transaction will enable Global Atlantic to continue operating as a separate business with its existing brands and management team, led by Chairman and CEO Allan Levine.
Global Atlantic is one of the largest fixed rate and fixed indexed annuity providers in the US, offering annuities for individuals through a network of banks, broker-dealers, and insurance agencies as well as life insurance for individuals and corporates.
The company is also active in the institutional channel, providing customised reinsurance solutions to its life and annuity company clients.
The acquisition values Global Atlantic at 1.0x its book value as of the date of closing, and KKR plans to fund the deal from a combination of cash on hand, proceeds from potential minority co-investors and the issuance of new debt and/or equity.
“We are thrilled to have a new, long-term partner in KKR,” said Levine. “With its global presence, investment acumen and long-term focus, we believe we will be even better positioned – financially and strategically – both to help Americans address the financial challenges they face today and to help our institutional channel clients achieve their strategic, risk, and capital management goals.”
“This is a transformative event for KKR,” added Henry Kravis and George Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “Global Atlantic is a best-in-class business with a like-minded entrepreneurial management team. Our businesses are complementary and our partnership will benefit all of our collective stakeholders.”
Joseph Bae and Scott Nuttall, Co-Presidents and Co-Chief Operating Officers of KKR, also commented: “This transaction is highly strategic for KKR — it meaningfully expands our base of permanent capital, further diversifies and scales our business, and significantly grows our position within the insurance industry, which has been increasing its exposure to alternative investment strategies.”
“Insurance providers play a critical role in supporting the financial security for millions of individuals. This transaction positions KKR to support Global Atlantic policyholders through our global network and asset management and origination capabilities.”
Looking at the strategic rationale for the acquisition, KKR sees Global Atlantic as focused on attractive, predictable and growing segments of insurance, with strong annual growth in operating earnings and book value.
And likewise, Global Atlantic believes its policyholders will benefit from KKR’s asset management and origination capabilities. KKR also plans to serve as Global Atlantic’s investment manager.
Once finalised, this acquisition will increase KKR’s assets under management from $207 billion to $279 billion.
KKR was advised on by Simpson Thacher & Bartlett LLP and Willkie Farr & Gallagher LLP, while Debevoise & Plimpton LLP acted as legal advisor to Global Atlantic.