Brookfield Asset Management - CEO, Bruce Flatt.
CEO, Bruce Flatt.
Source: Forbes.
  • Brookfield Asset Management (BAM.A) is expanding its presence in the US through a strategic partnership with American Equity Investment Life
  • Under the terms of the deal, Brookfield will acquire a 19.9 per cent stake in American Equity at a price of C$48.70 (US$37.00) per share
  • Brookfield will also reinsure up to $13.16 billion (US$10 billion) of American Equity’s fixed index annuity liabilities
  • In exchange, American Equity will receive access to Brookfield’s alternative asset strategies, which is expected to generate sustained returns
  • Brookfield Asset Management (BAM.A) is currently up 1.37 per cent and is trading at $45.09 per share

Brookfield Asset Management (BAM.A) is expanding its presence in the US through a strategic partnership with American Equity Investment Life.

Headquartered in West Des Moines, Iowa, the NYSE-listed holding company – through its wholly owned subsidiaries – offers fixed index annuities through independent agents, banks and broker-dealers.

Under the terms of the partnership, Brookfield will acquire a 19.9 per cent stake in American Equity, establishing itself as a cornerstone investor and reinsurance counterparty.

Following regulatory approval, Brookfield will acquire an initial 9.9 per cent interest at a price of C$48.70 (US$37.00) per share. A second 10 per cent stake will be purchased at the same or similar price, with an anticipated completion date in the first half of next year.

As a result, Brookfield will receive one seat on American Equity’s board upon completion of the first investment.

In addition to the acquisition, Brookfield will also reinsure up to $13.16 billion (US$10 billion) of American Equity’s fixed index annuity liabilities through its subsidiary, Brookfield Asset Management Partners. This includes an initial $6.58 billion (US$5 billion) of existing liabilities and a further $6.58 billion (US$5 billion) of future business.

In exchange, American Equity will receive access to Brookfield’s alternative asset strategies, which is expected to generate sustained returns.

Sachin Shah, Chief Investment Officer of Brookfield Asset Management, said the partnership – which has been a focus of discussions since March this year – will help to grow American Equity’s leading position as a retirement planning annuity provider.

“This transaction represents a meaningful investment for us in the attractive US insurance market and we believe our alternative asset strategies can deliver long-term value to the company.

“We look forward to supporting American Equity in advancing its AEL 2.0 strategy which is well-positioned to create value for all stakeholders,” he added.

The partnership reportedly comes after a failed takeover bid from Massachusetts Mutual Life Insurance Co. and Athene Holding, which American Equity formally rejected over the weekend.

According to the details of the cash offer, Massachusetts Mutual and Athene had offered to acquire American Equity at a price of $47.39 (US$36.00) per share, valuing the company at more than $3.95 billion (US$3 billion).

Anant Bhalla, President and CEO of American Equity, said the partnership with Brookfield demonstrates the significant shareholder value that has been created through its recently implemented AEL 2.0 strategy.

“This partnership accelerates the transformation of our business toward a ROA model from our historical focus on ROE, unlocks significant new investment opportunities, and enables us to deliver significant value to our shareholders and policyholders,” he concluded.

Brookfield Asset Management (BAM.A) is currently up 1.37 per cent and is trading at $45.09 per share at 10:08am EDT.

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