We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
American Equity (AEL), Brookfield to Ink Strategic Partnership
Read MoreHide Full Article
American Equity Investment Life Holding Company has inked a deal with Brookfield Asset Management Inc. (BAM - Free Report) . Per the strategic partnership, Brookfield will reinsure up to $10 billion of American Equity fixed index annuity liabilities as well as acquire 19.9% stake in American Equity. This transaction thus nullifies the unsolicited, non-binding acquisition proposal from Athene Holding and MassMutual Mutual Life Insurance Company for $36.00 per share in cash announced on Oct 1, 2020.
The Reinsurance Coverage
Brookfield through its reinsurance and annuity subsidiary Brookfield Asset Management Partners will reinsure $5 billion of existing liabilities and up to an incremental $5 billion of new sales of American Equity’s IncomeShield or similar fixed index annuity products.
American Equity is a leading issuer of fixed index annuities and brings in distribution, policyholder service and administration, product development and insurance specific asset management expertise.
Brookfield Asset Management is a leading global alternative asset manager with approximately $550 billion of assets under management across real estate, infrastructure, renewable power, private equity and credit that generates sturdy risk adjusted returns.
This transaction is thus a strategic fit for both parties. America Equity can have access to Brookfield’s investments in targeted asset classes and will help accelerate its AEL 2.0 strategy and generate sustained returns even in this low interest rate environment.
Brookfield on the other hand could make strategic investment in the attractive U.S. insurance market.
Per Anant Bhalla, CEO of American Equity, ‘this partnership accelerates the transformation of our business toward a ROA model from our historical focus on ROE, unlocks new investment opportunities, and enables us to deliver significant value to our shareholders and policyholders’.
America Equity has been working diligently toward executing its AEL 2.0 strategy. Last month, this Zacks Rank # 2 (Buy) leading issuer of fixed index annuities agreed to form a strategic partnership with Varde Partners and Agam Capital Management.
American Equity is targeting expansion into the global life and annuity reinsurance and third-party insurance asset management businesses and thus these strategic partnerships augur well for growth.
The Ownership
Brookfield’s 19.9% ownership in American Equity will be in two stages. Brookfield will acquire 9.9% stake for $37.00 per share post Hart-Scott-Rodino approval. The remaining 10% will be acquired for $37.00 per share or adjusted book value per share (excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives), whichever is more. The second stage will follow finalization of certain reinsurance agreement terms, receipt of applicable regulatory approvals and other closing conditions. The transaction is expected to close in the first half of 2021.
Brookfield will also be part of American Equity’s board of directors.
Share Buyback Program
Concurrently, the board of directors of American Equity’s approved a buyback program of up to $500 million of common shares. The company expects to deploy proceeds of the Brookfield equity investment and cash on hand to repurchase shares post its third-quarter earnings announcement. American Equity expects to offset the dilution from equity issuance with this share buyback.
Price Performance
Shares of American Equity have gained 8% against its industry’s decrease of 19.9% year to date. American Equity’s target market includes individuals in the age group of 45-75, seeking to accumulate tax-deferred savings or create guaranteed lifetime income. It remains focused on growing its leading position as a retirement planning annuity provider. These strategic partnerships will position the company to offer more attractive and wider variety of products to America’s retirees and pre-retirees.
Another Stock to Consider
Manulife Financial Corp. (MFC - Free Report) , sharing the same Zacks Rank as American Equity, delivered an earnings surprise of 30.23% in the last reported quarter.
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
Image: Bigstock
American Equity (AEL), Brookfield to Ink Strategic Partnership
American Equity Investment Life Holding Company has inked a deal with Brookfield Asset Management Inc. (BAM - Free Report) . Per the strategic partnership, Brookfield will reinsure up to $10 billion of American Equity fixed index annuity liabilities as well as acquire 19.9% stake in American Equity. This transaction thus nullifies the unsolicited, non-binding acquisition proposal from Athene Holding and MassMutual Mutual Life Insurance Company for $36.00 per share in cash announced on Oct 1, 2020.
The Reinsurance Coverage
Brookfield through its reinsurance and annuity subsidiary Brookfield Asset Management Partners will reinsure $5 billion of existing liabilities and up to an incremental $5 billion of new sales of American Equity’s IncomeShield or similar fixed index annuity products.
American Equity is a leading issuer of fixed index annuities and brings in distribution, policyholder service and administration, product development and insurance specific asset management expertise.
Brookfield Asset Management is a leading global alternative asset manager with approximately $550 billion of assets under management across real estate, infrastructure, renewable power, private equity and credit that generates sturdy risk adjusted returns.
This transaction is thus a strategic fit for both parties. America Equity can have access to Brookfield’s investments in targeted asset classes and will help accelerate its AEL 2.0 strategy and generate sustained returns even in this low interest rate environment.
Brookfield on the other hand could make strategic investment in the attractive U.S. insurance market.
Per Anant Bhalla, CEO of American Equity, ‘this partnership accelerates the transformation of our business toward a ROA model from our historical focus on ROE, unlocks new investment opportunities, and enables us to deliver significant value to our shareholders and policyholders’.
America Equity has been working diligently toward executing its AEL 2.0 strategy. Last month, this Zacks Rank # 2 (Buy) leading issuer of fixed index annuities agreed to form a strategic partnership with Varde Partners and Agam Capital Management.
American Equity is targeting expansion into the global life and annuity reinsurance and third-party insurance asset management businesses and thus these strategic partnerships augur well for growth.
The Ownership
Brookfield’s 19.9% ownership in American Equity will be in two stages. Brookfield will acquire 9.9% stake for $37.00 per share post Hart-Scott-Rodino approval. The remaining 10% will be acquired for $37.00 per share or adjusted book value per share (excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives), whichever is more. The second stage will follow finalization of certain reinsurance agreement terms, receipt of applicable regulatory approvals and other closing conditions. The transaction is expected to close in the first half of 2021.
Brookfield will also be part of American Equity’s board of directors.
Share Buyback Program
Concurrently, the board of directors of American Equity’s approved a buyback program of up to $500 million of common shares. The company expects to deploy proceeds of the Brookfield equity investment and cash on hand to repurchase shares post its third-quarter earnings announcement. American Equity expects to offset the dilution from equity issuance with this share buyback.
Price Performance
Shares of American Equity have gained 8% against its industry’s decrease of 19.9% year to date. American Equity’s target market includes individuals in the age group of 45-75, seeking to accumulate tax-deferred savings or create guaranteed lifetime income. It remains focused on growing its leading position as a retirement planning annuity provider. These strategic partnerships will position the company to offer more attractive and wider variety of products to America’s retirees and pre-retirees.
Another Stock to Consider
Manulife Financial Corp. (MFC - Free Report) , sharing the same Zacks Rank as American Equity, delivered an earnings surprise of 30.23% in the last reported quarter.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
Click Here, See It Free >>