No More Guessing: Here’s the Aviva Deal

By Linda Koco
AnnuityNews

Anyone who wants the skinny on the proposed private equity purchase of Aviva USA need wait no longer.

The Iowa Insurance Division has posted Apollo Global Management LLC’s application to buy the big Iowa annuity carrier on the division’s website. 

The Application For Acquisition Of Control Of Aviva Life And Annuity Company runs 1,403 pages long, and is accompanied by a public hearing notice on the proposed deal.

The division says it will hold the hearing on July 17 in its Des Moines offices.

The purpose of the hearing will be to determine whether New York-based Apollo’s plan to acquire control of Aviva USA complies with Iowa Code. Those allowed to present at the hearing include not only the applicants but also “any other interested party.”

According to the hearing notice, the commissioner will approve the deal if Apollo can meet several conditions.

Two of the conditions address issues that are of keen interest to insurance interests nationwide. These have to do with the impact that Apollo ownership could have on Aviva’s financial strength and on its policyholders, and whether Apollo have plans to flip the company within just a few years.

Specifically, the hearing notice says the Apollo will need to demonstrate that:

•  “…the financial condition of any acquiring party will not jeopardize the financial stability of the insurer, or prejudice the interest of its policyholders.”
• Any plans Apollo has to liquidate the insurer; sell its assets or consolidate or merge it; or make other material change in business/corporate structure or management “are not unfair or unreasonable to policyholders of the insurer and are not contrary to the public interest.”

Some insurance industry professionals have been slow to warm up to the idea of private equity firms buying life insurance and annuity carriers. That is due to the reputation that private equity firms have developed of selling the businesses they buy within three to five years or so.  Insurance is a long-term business, these observers contend, so short-term ownership could destabilize company operations, policyholder interests, and the market in general.

In New York, state regulators are exploring that issue right now in an official inquiry launched by Benjamin M. Lawsky, superintendent of the New York State Department of Financial Services (DFS).

Apollo’s lengthy application for AVIVA USA says that Apollo’s Bermuda unit, Athene Holding Ltd., would buy 100 percent of the issued and outstanding capital stock of Aviva USA Corporation. This would make AVIVA a direct, wholly owned subsidiary of Athene Holding.

Linda Koco, MBA, is a contributing editor to AnnuityNews, specializing in life insurance, annuities and income planning. Linda can be reached at linda.koco@innfeedback.com.

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Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at linda.koco@innfeedback.com.