In a major deal between two companies, Canadian investment giant Brookfield agreed to buy the remaining stake in American Equity Investment Life Holding for $4.3 billion. The agreement is set to close in the first half of next year and includes a termination fee of $102 million if the deal is cancelled.
American Equity Investment Life Holding provides annuities, an insurance contract that customers buy for a steady income after retiring. Brookfield’s offer of $55 per share is a 35% premium to the last closing price of American Equity, and values the company an overall $4.3 billion.
Brookfield Reinsurance Ltd. already owns a 20% stake in American Equity and anticipates that the deal will represent a “important step in the continued growth of [their] insurance business,” according to representatives from Brookfield, Brookfield Asset Management.
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Jon Bayer, CEO of Brookfield Reinsurance, further shared that “given the complementary nature of AEL’s leading fixed annuity business to our existing platform, we expect to accelerate growth.”
Although American Equity is best known for providing annuities, Evercore ISI analysts suggest that the company could “become more competitive on pricing new business within the FIA (fixed index annuity) market, which should improve its overall level of net flows.”
Ultimately, the deal represents an opportunity for growth for both companies. American Equity Investment Life Holding Co. will become private once the deal closes, and Brookfield Reinsurance will have access to a larger platform. With the expected growth for both companies, the partnership between Brookfield and American Equity Investment Life Holding Co. is a lucrative one.
