Brookfield to Reinsure As much as $10 Billion of American Fairness Fastened Index Annuity Liabilities and Make 19.9% Fairness Funding in American Fairness At $37.00 Per Share for Preliminary Funding
American Fairness Board Authorizes $500 Million Share Repurchase Program
Rejects Unsolicited, Non-Binding Acquisition Proposal from Athene and MassMutual
American Fairness Funding Life Holding Firm (NYSE: AEL) introduced as we speak that it has entered right into a strategic partnership with Brookfield Asset Administration Inc. for the reinsurance of $5 billion of current liabilities and as much as an incremental $5 billion of recent gross sales of American Fairness’s IncomeShield or comparable fastened index annuity merchandise.
American Fairness will obtain entry to Brookfield investments in focused asset lessons as a part of the strategic partnership. Brookfield’s place as a number one different asset supervisor with vital scale in engaging asset lessons producing robust danger adjusted returns, will permit American Fairness shareholders and policyholders the chance to profit from publicity to differentiated different asset methods with long-term, contractual money flows and deploy vital capital into proprietary Brookfield investments.
As a part of this strategic partnership, Brookfield will purchase a 19.9% possession curiosity within the frequent shares of American Fairness. The fairness funding will happen in two levels: an preliminary buy of a 9.9% fairness curiosity at $37.00 per share promptly following Hart-Scott-Rodino approval, and a second buy of an incremental 10.0% fairness curiosity, on the larger worth of $37.00 per share or adjusted ebook worth per share (excluding AOCI and the web influence of truthful worth accounting for derivatives and embedded derivatives). The second fairness funding is topic to finalization of sure reinsurance settlement phrases, receipt of relevant regulatory approvals and different closing circumstances and is anticipated to shut within the first half of 2021. As well as, Brookfield has agreed to not switch any frequent shares bought within the fairness funding for a interval of two years after the relevant closing of the funding, in addition to to customary standstill restrictions till the five-year anniversary of the preliminary fairness funding, in every case, topic to sure exceptions. Brookfield will even obtain one seat on American Fairness’s Board of Administrators following the preliminary fairness funding.
Anant Bhalla, President and Chief Govt Officer of American Fairness, stated: “This compelling strategic transaction, which we have now been discussing with Brookfield since March, demonstrates the substantial shareholder worth we’re creating via execution of our AEL 2.0 technique. By partnering with a world-class asset administration and funding agency like Brookfield, we’re accelerating the implementation of our technique to be the main, customer-focused annuity supplier with best-in-class capabilities throughout your entire insurance coverage worth chain, from distribution to asset administration. This partnership accelerates the transformation of our enterprise towards a ROA mannequin from our historic deal with ROE, unlocks new funding alternatives, and allows us to ship vital worth to our shareholders and policyholders.”
Sachin Shah, Brookfield’s Chief Funding Officer, stated “We’re happy to be investing in AEL and to associate with the enterprise in reinsurance because it grows its main place as a retirement planning annuity supplier. This transaction represents a significant funding for us within the engaging U.S. insurance coverage market and we imagine our different asset methods can ship long-term worth to the corporate. We sit up for supporting American Fairness in advancing its AEL 2.0 technique which is well-positioned to create worth for all stakeholders.”
The Firm famous that the transaction advances a number of targets of its AEL 2.0 technique:
- Offers distinctive entry to Brookfield’s engaging, higher-returning different asset methods, which place American Fairness to generate sustained returns in a low rate of interest setting.
- Accelerates progress via entry to everlasting capital and helps modern new merchandise, together with IncomeShield, which meet the present and future wants of shoppers.
- Accelerates the transformation of American Fairness’s enterprise mannequin from return on fairness (ROE) towards return on belongings (ROA) and releases capital obtainable for share repurchases, natural progress, and strategic initiatives.
- Establishes a brand new partnership with a number one asset supervisor in Brookfield, constructing on AEL’s lately introduced settlement in precept to kind a partnership with Värde Companions and Agam Capital Administration, LLC, to develop worth for shareholders and different stakeholders.
Authorization of $500 Million Share Repurchase Program
American Fairness’s Board has licensed the repurchase of as much as $500 million of frequent shares to be funded with the proceeds of the Brookfield fairness funding and money readily available. The repurchase is anticipated to offset dilution from the issuance of frequent shares to Brookfield. American Fairness expects to begin the share repurchase after its third quarter earnings announcement.
The precise timing of repurchases and the precise variety of frequent shares to be bought will depend on market circumstances and different components. Underneath the repurchase program, repurchases may be made utilizing a wide range of strategies, together with open market purchases, in compliance with federal securities legal guidelines.
Rejection of Unsolicited, Non-Binding Proposal from Athene and MassMutual
After cautious evaluate with the help of its monetary and authorized advisors, American Fairness’s Board unanimously decided that Athene and MassMutual’s unsolicited, non-binding proposal made public by Athene on October 1, 2020 is opportunistic, considerably undervalues the Firm, and isn’t in the most effective pursuits of American Fairness and its shareholders and different stakeholders.
John M. Matovina, Chairman of American Fairness’s Board, stated: “The Board is worked up in regards to the value-creation prospects of the Firm’s AEL 2.0 strategic plan, which is already delivering outcomes as demonstrated by as we speak’s announcement. We strongly imagine that is the suitable plan of action for maximizing long-term worth for our shareholders and different stakeholders.”
J.P. Morgan and Morgan Stanley & Co. LLC are serving as monetary advisors to American Fairness. Ardea Companions is serving as unique monetary advisor to American Fairness within the Brookfield transaction. Skadden, Arps, Slate, Meagher & Flom LLP is performing as authorized counsel to American Fairness.
About American Fairness
American Fairness Funding Life Holding Firm, via its wholly-owned subsidiaries, is a number one issuer of fastened index annuities via impartial brokers, banks and broker-dealers. American Fairness Funding Life Holding Firm, a New York Inventory Change listed firm (NYSE: AEL), is headquartered in West Des Moines, Iowa. For extra data, please go to www.american-equity.com.
About Brookfield Asset Administration
Brookfield Asset Administration is a number one world different asset supervisor with roughly US$550 billion of belongings below administration throughout actual property, infrastructure, renewable energy, non-public fairness and credit score. Brookfield owns and operates long-life belongings and companies, a lot of which kind the spine of the worldwide economic system. Using its world attain, entry to large-scale capital and operational experience, Brookfield gives a spread of other funding merchandise to buyers all over the world—together with private and non-private pension plans, endowments and foundations, sovereign wealth funds, monetary establishments, insurance coverage corporations and personal wealth buyers.
Brookfield Asset Administration is listed on the New York and Toronto inventory exchanges below the symbols BAM and BAM.A, respectively.
This press launch and any oral associated statements made by our representatives could comprise forward-looking statements throughout the which means of Part 27A of the Securities Act of 1933 and Part 21E of the Securities Change Act of 1934. Ahead-looking statements could relate to strategic alternate options, future operations, methods, plans, partnerships, investments, share buybacks, monetary outcomes or different developments, and are topic to assumptions, dangers and uncertainties. Statements equivalent to “steerage”, “anticipate”, “anticipate”, “robust”, “imagine”, “intend”, “objective”, “goal”, “goal”, “place”, “potential”, “will”, “could”, “would”, “ought to”, “can”, “ship”, “speed up”, “allow”, “estimate”, “initiatives”, “outlook”, “alternative” or comparable phrases, in addition to particular projections of future occasions or outcomes qualify as forward-looking statements. Ahead-looking statements, by their nature, are topic to a wide range of inherent dangers and uncertainties that might trigger precise outcomes to vary materially from the outcomes projected. Many of those dangers and uncertainties can’t be managed by the Firm and embrace the chance that the proposed transaction will not be accomplished. Components that will trigger our precise selections or outcomes to vary materially from these contemplated by these forward-looking statements may be discovered within the Firm’s Kind 10-Ok and Kind 10-Q filed with the Securities and Change Fee. Ahead-looking statements communicate solely as of the date the assertion was made and the Firm undertakes no obligation to replace such forward-looking statements. There may be no assurance that different components not presently disclosed or anticipated by the Firm is not going to materially adversely have an effect on our outcomes of operations or plans. Buyers are cautioned to not place undue reliance on any forward-looking statements made by us or on our behalf.
Steven D. Schwartz, Vice President – Investor Relations
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