Canadian asset manager Brookfield Reinsurance and West Des Moines, Iowa-based American Equity Investment Life Holding Company (AEL) today announced that they have entered into a definitive agreement for Brookfield Reinsurance 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.
American Equity, a pioneer of the modern indexed annuity market, had previously rejected two earlier offers from Brookfield Re, which said in a statement announcing the deal that it plans to keep AEL’s headquarters in West Des Moines and increase its annuity sales.
As part 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 Ltd. class A limited voting share having a value equal to $16.15 (based on the undisturbed 90-day volume-weighted average share price [“VWAP”] of the BAM Shares on June 23, 2023.
The Merger Consideration of $55.00 per share represents a 35% premium to AEL’s undisturbed closing share price on June 23, 2023 and a 42% premium to AEL’s 90-day VWAP as of that date.
“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,” said Anant Bhalla, President and CEO of AEL. “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.”
David Mulcahy, Non-Executive Chairman of AEL’s board, added, “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.”
Sachin Shah, CEO of Brookfield Reinsurance, said the transaction represents an important step in the continued growth of its insurance business, further diversifying, and scaling, its insurance capabilities, and is a direct result of the partnership developed with AEL since it 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,” Shah said. “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, Jon Bayer, Managing Partner,Brookfield Reinsurance, said he expects to accelerate growth in collaboration with its distribution partners and employees while continuing to meet the needs of 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,” Bayer said.
Brookfield Reinsurance also intends to continue AEL’s focus on alternative asset strategies and expects BAM will manage a significant portion of AEL’s assets. As a result, AEL will gain access to BAM’s leading direct origination platforms and asset management capabilities while maintaining its current high-quality bias and investment grade focus.
The transaction is not subject to any financing condition or contingency. Each of Brookfield Reinsurance’s and AEL’s boards of directors unanimously approved the merger agreement.
The merger is expected to close in the first half of 2024, subject to approval by AEL shareholders and other closing conditions customary for a transaction of this type.
For complete information about the deal, visit https://ir.american-equity.com/news-releases/news-release-details/brookfield-reinsurance-acquire-ael-43-billion-transaction.