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American Equity Announces Strategic Partnership With 26North
Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Very Positive)
Tags
partnership
Rhea-AI Summary
American Equity (NYSE: AEL) has announced a strategic partnership with 26North Partners LP to enhance its AEL 2.0 strategy and generate shareholder value. This collaboration involves a long-term investment and the reinsurance of approximately $4.3 billion in GAAP reserves of fixed indexed annuity policies, which is projected to provide an initial capital release exceeding $250 million. CEO Anant Bhalla will also join the board of 26North, marking a significant step in improving American Equity’s capital flexibility and investment opportunities.
Positive
Strategic investment in 26North supports AEL 2.0 strategy.
Reinsurance transaction generates an initial capital release exceeding $250 million.
American Equity to Acquire Strategic Equity Stake in 26North;
Anant Bhalla to Join 26North Board of Directors
26North Reinsures $4.3 Billion of GAAP Reserves of American Equity Fixed Indexed Annuity Policies
Partnership Further Accelerates AEL 2.0 Strategy to Generate Shareholder Value
WEST DES MOINES, Iowa--(BUSINESS WIRE)--
American Equity Investment Life Holding Company (American Equity) (NYSE: AEL), a leading issuer of fixed index annuities (FIAs), announced that it is entering into a long-term partnership with 26North Partners LP (26North), a multi-asset platform founded and led by Josh Harris, in which American Equity has made a strategic investment. Anant Bhalla, Chief Executive Officer and President of American Equity, will join the Board of Directors of 26North.
A Bermuda-based reinsurer, AeBe ISA Ltd., which is affiliated with 26North, has reinsured approximately $4.3 billion of GAAP reserves of American Equity fixed indexed annuity policies from 2008 and 2010. American Equity estimates that this will generate an initial capital release in excess of $250 million and generate a positive ceding commission, thereby growing AEL’s revenue-generating reinsured liabilities.
Anant Bhalla, Chief Executive Officer and President of American Equity, said, “This partnership with 26North is a further step in our AEL 2.0 strategy to deliver significant value to all shareholders. The strategy is aligned with policyholders through our unique go-to-market and investment management approaches and capital-light structure. We continue to refine a capital-efficient business model to deliver superior, sustained returns for our shareholders and further strengthen our robust balance sheet. This deal will enable greater capital flexibility for AEL as we benefit from 26North’s investment expertise to deliver on attractive opportunities across private asset classes. We are proud to add 26North to our outstanding investment partner ecosystem and further advance our transformation into a hybrid, diversified financial services firm.”
Mr. Bhalla continued, “Our agreement with 26North complements the strategic partnerships we have struck to support our unique investment management strategy, with each transaction providing access to a specific asset sector. Partnering with world-class investment firms – Adams Street, Monroe Capital, Pretium and now 26North – allows all AEL shareholders to participate in asset management economics, which is fundamental to our AEL 2.0 strategy.”
The reinsurance transaction is effective as of October 1, 2022.
FORWARD-LOOKING STATEMENTS AND OTHER DISCLAIMERS
The forward-looking statements in this release such as continue, strategy, long-term, strategy, and will, and their derivative forms and similar words, as well as any projections of future results, are based on assumptions and expectations that involve risks and uncertainties, including the "Risk Factors" the company describes in its U.S. Securities and Exchange Commission filings. The Company's future results could differ, and it has no obligation to correct or update any of these statements.
ABOUT AMERICAN EQUITY
At American Equity Investment Life Holding Company, we think of ourselves as The Financial Dignity CompanyTM that offers solutions designed to create financial dignity in retirement. Our policyholders work with independent agents, banks and broker-dealers, through our wholly-owned operating subsidiaries, to choose one of our leading annuity products best suited for their personal needs. To deliver on our promises to policyholders, American Equity has reframed its investment focus, building a stronger emphasis on insurance liability driven asset allocation as well as the origination and management of private assets. Our company is headquartered in West Des Moines, Iowa with satellite offices slated to open in 2022 in Charlotte, NC and New York, NY. For more information, please visit www.american-equity.com.
ABOUT 26NORTH
26North Partners LP is an integrated, multi-asset class investment platform, founded and led by Josh Harris. 26North provides investment advice and opportunities to its clients related to a variety of investment strategies, including, but not limited to, private equity, credit, and insurance and reinsurance solutions.
Josh Harris and the 26North team bring decades of experience managing third-party capital to help clients achieve their financial goals while leaving a lasting impact on the communities they serve.
26North has more than $9.5 billion in assets under management.
Source: American Equity Investment Life Holding Company
FAQ
What is the partnership between American Equity and 26North about?
American Equity has formed a strategic partnership with 26North to bolster its AEL 2.0 strategy and enhance shareholder value through a long-term investment and reinsurance of GAAP reserves.
How much capital is American Equity expected to release from its deal with 26North?
American Equity estimates that the reinsurance transaction with 26North will generate an initial capital release exceeding $250 million.
Who will join the board of 26North from American Equity?
Anant Bhalla, the CEO and President of American Equity, will join the Board of Directors of 26North.
What is the significance of the $4.3 billion reinsurance for American Equity?
The $4.3 billion in GAAP reserves reinsured is expected to strengthen American Equity's financial position and contribute to its revenue-generating reinsured liabilities.
When did the reinsurance transaction between American Equity and 26North become effective?
The reinsurance transaction became effective on October 1, 2022.
