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American Equity (AEL) Gets Buyout Proposal From Brookfield

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American Equity Investment Life Holding Company (AEL - Free Report) has received an acquisition proposal from Brookfield Reinsurance Ltd. for $55.00 per share for the shares that Brookfield Reinsurance does not already own. The consideration comprises $38.85 per share in cash and $16.15 per share in Brookfield Asset Management Ltd. (BAM - Free Report) Class A limited voting shares. This proposal is based on the unaffected 90-day volume-weighted average price as of Jun 23, 2023.

Strategic Relationship Between AEL & Brookfield Asset Management

AEL, a leading issuer of fixed index annuities, has a strategic relationship with Brookfield Asset Management since 2020. On Oct 18, 2020, AEL entered into an agreement with Brookfield Asset Management, Inc. and its affiliated entities. Per the agreement, Brookfield was supposed to acquire up to 19.9% ownership interest in AEL.

Effective Jul 1, 2021 American Equity entered into a reinsurance agreement with North End Re, a wholly owned subsidiary of Brookfield Reinsurance, to reinsure certain in-force fixed indexed annuity product liabilities.

Brookfield Reinsurance had an approximately 18.7% interest in the company's outstanding common stock as of Dec 31, 2022

How Will American Equity Benefit Once Proposal Is Accepted?

The acquisition proposal from Brookfield Reinsurance represents a pivotal moment for American Equity Investment. If the proposal is accepted, AEL would gain access to Brookfield's investments in targeted asset classes. The strategic alliance will unlock new growth opportunities and propel the company's AEL 2.0 strategy.

By leveraging Brookfield's expertise and resources, American Equity aims to enhance its product offerings and expand its market presence. This strategic relationship positions American Equity for continued growth and success in the competitive insurance industry. As the situation unfolds, both American Equity and Brookfield Asset Management stand to benefit from this potential merger, paving the way for a mutually advantageous partnership in the insurance and asset management sectors.

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 generate sturdy risk-adjusted returns.

Benefits for Brookfield Asset Management

Should the acquisition proposal be accepted, Brookfield Asset Management’s position in the insurance industry will get a boost. This strategic move will allow Brookfield to diversify its portfolio and capitalize on the potential growth of the fixed index annuities market. By leveraging the expertise and market presence of American Equity, Brookfield is likely to enhance its overall investment capabilities and further solidify its position as a leading global asset management company.

American Equity Rejects Unsolicited Acquisition Proposal

In addition to the proposal from Brookfield Reinsurance, American Equity recently received an unsolicited acquisition proposal from Prosperity Group Holdings LP and Elliott Investment Management L.P. After careful consideration, AEL’s board of directors decided to reject this proposal as it was not in sync with its vision. The company remains committed to maximizing shareholder value and will continue to pursue strategic opportunities that align with its long-term growth objectives.

Zacks Rank and Price Performance

American Equity carries a Zacks #3 (Hold) currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of AEL have lost 9.9% in a year compared with the industry’s decline of 10.5%.


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Stocks to Consider

Some top-ranked stocks from the life insurance industry are Reinsurance Group of America (RGA - Free Report) and Primerica (PRI - Free Report) .

Reinsurance Group’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, while missing in one. RGA sports a Zacks Rank #1.

The Zacks Consensus Estimate for RGA’s 2023 and 2024 earnings per share indicates a year-over-year increase of 22.9% and 1.4%, respectively. Year to date, RGA shares have lost 1.7%.

Primerica’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, while missing in one. PRI carries a Zacks Rank #2.

The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings per share indicates a year-over-year increase of 34% and 11.5 respectively. Year to date, PRI shares have surged 36.9%.

Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.

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