MassMutual Offers To Buy American Equity With Athene’s Cash

American Equity is asking shareholders not to sell to Athene and MassMutual until the company’s board can review the offer.

Athene Holding and Massachusetts Mutual Life Insurance are offering $36 per share of common stock to acquire American Equity. The company’s shares were selling at $31.68 as of Thursday close. The price popped from $22.01 on Wednesday to $33.99 when the exchange opened this morning.

The American Equity board has been aware of the offer since Sept. 8, when Athene and MassMutual sent the company a letter with the offer.

“MassMutual would acquire all of the insurance operations and personnel of AEL and Athene would reinsure 80% of the in-force policyholder liabilities of AEL,” according to the letter, filed with the SEC.

American Equity would keep its managers and employees, according to the letter.

“Under MassMutual’s ownership, American Equity will be maintained as an independent operating business, with its employees and management continuing to lead the company. We have a strong desire to grow the American Equity franchise and support new business volumes through MassMutual’s anticipated investments in technology, and by expanding product offerings. We believe we can further enhance American Equity’s competitiveness in the marketplace through leveraging MassMutual’s distinctive asset management and state-of-the-art policy administration capabilities.”

The letter also states that American Equity and MassMutual are a natural fit: “American Equity and MassMutual share a common culture of prioritizing policyholder needs and helping policyholders secure their futures for the long-term. In addition, MassMutual highly values American Equity’s new business platform and third-party distribution channels including its strong relationships with various IMOs and independent advisors. A combination with MassMutual would be mutually complementary, as American Equity will expand MassMutual’s annuity offerings and third-party distribution capabilities, while MassMutual’s strength could accelerate American Equity’s expansion into the bank and broker-dealer distribution channels.”

MassMutual and Athene have plenty of money for the purchase, the letter said, especially with Athene's cash.

"Both Athene and MassMutual are extremely well-capitalized, and as such, this transaction will be financed with existing capital resources including excess capital position and access to other financing sources," according to the document. "Furthermore, Athene retains over $3 billion of excess capital on balance sheet with further access to $3 billion of undrawn capital in ADIP, its drawdown sidecar vehicle."

American Equity has been seeking a buyer for the past few years, with a potential deal falling through in early 2019.

The Wall Street Journal first reported on the sale this morning.

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at smorelli@adnewsfeedback.com.

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Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at steve@innemail.com.